Where Can You Find Fraud? Start with This Department First

According to the ACFE 2010 Report to the Nation, 80 percent of the fraudulent acts were committed by employees in six departments: accounting, operations, sales, executive/upper management, customer service and purchasing.  Overall, the Accounting Department had the highest percentage of cases at 22 percent, but only had a median loss of $180,000, compared to $829,000 for Executive/Upper Management. In the United States, the Accounting Department accounted for 24.3 percent of the cases.

For the Accounting Department, the five most common fraud schemes were check tampering, billing, skimming, cash larceny and payroll. (ACFE 2010 Report to the Nation)

Behavioral red flags are not proof that someone has committed fraud, but they can be a warning to management and others.  These red flags can include living beyond their means, financial difficulties, control issues, close relationship with customers or vendors, family issues.

If your organization suspects fraud, start with the Accounting Department, but don’t overlook the other departments that have access to financial data as well, like the executive management.


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