Understanding them is your first step in protecting your business from serious loss.
In Sub-Saharan Africa
- Over 60% of frauds were committed by people with a degree (in view of the large number of fake degrees consider carefully checking qualifications when hiring).
- 82% of perpetrators were male with an average age of 38.
- 18% came from the accounting department, 17% from operations and 11% from purchasing.
In global terms
- 5% of revenues are lost due to fraud. This applies to large and small entities but clearly will have a greater impact on small entities.
- The best method of fraud detection is by tip-off (approximately 30% of cases), followed by management review (15%), internal audit (12%) and account reconciliation (just under 10%). If you don’t have a tip-off or whistle blower policy, now is the time to do it. Most of the other detection methods come from active management control.
- Most frauds come from asset theft and the largest (by value) from financial mis-statement.
- 90% of background checks did not pick up any indication of malfeasance and 82% of fraudsters had not been punished by their organisations. Something also to consider – and check with previous employers – when recruiting.
- Fraud losses were detected much faster and the loss was 34% less in entities with strong controls.
- Those committing fraud typically showed some of these characteristics:
- “Wheeler dealer” personalities
- Financial problems
- Living beyond their means
- Control issues
- Strong relationship with a vendor
- Family difficulties such as divorce.
Don’t become a “fraud statistic” – analyse the risk factors listed above and take preventative action now!
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)