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May 18, 2012 10:08:15 am

Proven Strategies for Fraud Prevention

A new report found that the two key elements to successfully detecting and preventing fraud were providing a means for individuals to report suspicious activity and conducting targeted fraud awareness training for employees and managers.

The 2012 report, entitled “Report to the Nations on Occupational Fraud and Abuse” by the Association of Certified Fraud Examiners (ACFE), found that fraud is most frequently detected through employee tips.  Companies with anti-fraud training programs experience both less costly losses and shorter occurrences of fraud. 

ACFE began tracking fraud data in 2002.  The report found that 43% of the frauds in the survey were initially detected by a tip.  The agency looked at 1,388 fraud cases in 96 countries.

Another Certified Fraud Examiners survey found that the companies most commonly used the following methods to prevent fraud:

• General internal controls
• Screening of new employees
• Division of responsibilities
• Appropriate oversight
• Physical controls, and
• Computer-based controls.

The survey, entitled “The 2011 Forensic and Valuation Services (FVS) Trend Survey”, was conducted by American Institute of CPAs (AICPA) also found that technology is having a significant effect on fraud.  The 737 forensic and valuation CPAs who responded to the survey said that knowledge of forensic procedures, and computer-driven internal controls were the most useful training related to financial statement misrepresentation.

For a detailed discussion of fraud statistics and strategies, please see Charted Global Management Accountant.  To see the full ACFE “2012 Report to the Nations”, click here.  For the full AICPA survey, click here. 

To learn about REDW’s Risk Assessment services, please contact Steve Cogan.

Tags: Audit, Internal Audit, Risk, Fraud

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