Report finds fraud hits small businesses harder
According to the recently released 2018 Report to the Nations on Occupational Fraud and Abuse, occupational fraud continues to drain a significant amount of money from businesses worldwide, with smaller organizations being hit particularly hard.
The Journal of Accountancy recently highlighted the following data points from the report.
- While 44% of frauds at larger businesses were detected by a tip, only 29% of frauds at small businesses were.
- While a lack of controls contributed to only 25% of frauds at larger businesses, it accounted for 42% of frauds at small businesses.
Fraud differs in other ways at businesses with fewer than 100 employees:
- An owner or executive committed nearly 29% of frauds at small businesses, compared with 16% at larger businesses. That’s particularly bad because frauds perpetrated by owners or executives produced median losses of $850,000.
- Some frauds occurred much more frequently at small businesses. For example, check and payment tampering was nearly three times more likely at a small business than a larger one (22% to 8%). Other frauds much more common at small businesses included skimming (20% vs. 8%) and payroll (13% to 5%).
All told, the 2,690 cases of occupational fraud covered in the report came from 23 industry categories in 125 countries. The median duration of those schemes was 16 months, and total losses for just those cases topped $7 billion.
Check out all of the key findings from the report in this infographic.