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Profiling the typical fraudster
I remember hearing a police detective on television
describing a crime suspect to his captain based on interviewing
eyewitnesses. The description went something like this: "The suspect was a
tall, short guy; somewhere between 125 and 250 pounds; one eye blue, one eye
brown, the third one green." While the description may be amusing, the truth
is it isn’t too far off the profile of a typical fraudster.
The Association of Certified Fraud Examiners’ "Report to
the Nation on Occupational Fraud and Abuse, 1996," provides the following
information profiling fraud perpetrators, based on the experience of 2,608
certified fraud examiners investigating more than one million cases of fraud
occurring principally over the last 10 years:
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The typical perpetrator was a college-educated white male.
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Men committed nearly three-fourths of the offenses.
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Median losses caused by men were nearly four times those caused by
women.
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Losses caused by managers were four times those caused by employees.
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Median losses caused by executives were 16 times those of their
employees
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Losses caused by perpetrators 60 and older were 28 times those caused
by perpetrators 25 or younger.
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Losses caused by perpetrators with post-graduate degrees were more
than five times greater than those caused by high school graduates.
The study also discusses the dollar cost of occupational
fraud and abuse, including:
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The median loss per case caused by males was $185,000; by females,
$48,000.
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Median losses caused by non-managerial employees were $60,000; by
managers, $250,000; and by owners/executives, $1,000,000.
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Perpetrators under age 25 caused median losses of about $12,000;
perpetrators age 60 and older, $346,000.
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The average organization loses about six percent of its total annual
revenue to fraud and abuse committed by its own employees, or more than $9
a day per employee.
Among the study’s conclusions is the high correlation
between the amount lost and the fraudster’s position in the organization. As
a general rule, men and older employees occupy higher-level positions and
therefore have greater access to assets and greater ability to override
internal controls.
You may be troubled by the realization that the typical
fraudster profiled above looks like…you! If so, take solace in the larger
point made by the study: the typical fraudster can be anyone.
Source: David W. White, CPA, CFE, is a sole practitioner based in San
Diego, CA. (Contact:
white@electriciti.com)
Profile of an embezzler
NOVEMBER 2000: Embezzlement is as much a
violation of trust as it is a crime. Employers are often left shocked,
embarrassed and disheartened when they realize they have been decieved. But
there are warning signs.
Average Joe?
There is no one characteristic that singles
out the perpetrators, but there are several corroborating circumstances that
can lead employees astray. They must hold a position of confidence within
the organization, be able to recognize an opportunity for fraud, and possess
the technical skills necessary for misappropriation. (Read
more...)
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