Survey & Statistics
Not for Profit Fraud Survey 2010
The not-for-profit (NFP) sector is quite significant to the economy and recent reported cases have raised questions about the extent of fraud in this sector. There are over 700,000 NFPs across Australia and New Zealand, with a combined income of $76 billion, holding approximately $138 billion in assets and contributing approximately 4.1% to GDP. The sector covers a diverse range of organisations in areas such as: culture and recreation, education and research, health, social services, environment, development and housing, law and politics, philanthropy, religion and business and professional associations.
There is concern about the damaging effects fraud can have on NFPs. The community already has questions about what portion of public and donated funds actually benefit the intended recipients. Reports of fraud can affect the community’s willingness to donate funds, but also reduce NFPs’ ability to obtain funding and grants from various agencies.
The main lessons for the NFP sector are for the Board to practice strong governance and risk management, establish a fraud control policy, implement and promote a strong ethical culture through a code of conduct, establish a whistle-blower policy and establish and monitor internal controls.
KPMG Fraud Survey 2008
The survey was derived from the responses to a questionnaire sent in August 2008 to 2,018 of Australia’s and New Zealand’s largest organisations across the public and private sectors. The questionnaire sought information about fraud incidents within the respondents’ business operations during the period February 2006 to January 2008.1 Usable responses were received from 420 organisations, representing just over 20 percent of the surveys distributed.
The total value of fraud reported was $301.1 million with an average value for each organisation of $1.5 million. Twenty-six respondents reported single frauds with a value of greater than $200 000 each and there were seven organisations where the value of fraud exceeded $3 million.
The most significant initiative taken to reduce the risk of fraud was reviewing and/or improving internal controls (99 percent) and developing a code of conduct/ethics (92 percent). Overall, there was an increase in fraud risk management strategies in place compared to the 2006 survey.
The most significant increases were in performing data analytics (76 percent compared to 19 percent in 2006), developing a fraud control strategy (78 percent compared to 49 percent in 2006), conducting fraud risk assessments (82 percent compared to 50 percent in 2006) and conducting fraud awareness training (64 percent compared to 38 percent in 2006). These results indicate organisations are increasingly following leading practice in fraud risk management.
Association of Certified Fraud Examiners (ACFE) 2008 Report to the Nation on Occupational Fraud & Abuse
This study is based on data compiled from 959 cases of occupational fraud that were investigated between January 2006 and February 2008.
Despite increased focus on anti-fraud controls in the wake of Sarbanes-Oxley and mandated consideration of fraud in financial statement audits due to SAS 99, our data shows that occupational frauds are much more likely to be detected by a tip than by audits, controls or any other means. Forty-six percent of the cases in this Report were detected by tips from employees, customers, vendors, and other sources. Tips were also the most common means of detection in 2002, 2004 and 2006.
KPMG Fraud Survey 2006
The survey was derived from the responses to a questionnaire sent in February 2006 to 2,146 of Australia’s and New Zealand’s largest organisations across the public and private sectors. The questionnaire contained 48 questions. It sought information about fraud incidents within the respondents’ business operations during the period April 2004 to January 2006.1 Usable responses were received from 465 organisations, representing just over 21 percent of the surveys distributed.
Total value of fraud reported was $154.9 million with an average value for each organisation of $714,000.
Association of Certified Fraud Examiners (ACFE) 2006 Report to the Nation on Occupational Fraud & Abuse
This study was based on 1,134 cases of investigated cases of occupational fraud in USA between the period of January 2004 to January 2006.
The median loss suffered by organizations with fewer than 100 employees was $190,000 per scheme. This was higher than the median loss in even the largest organizations. The most common occupationalfrauds in small businesses involve employees fraudulently writing company checks, skimming revenues, and processing fraudulent invoices.
Our data supports the use of confidential hotlines and other reporting mechanisms as a fraud detection tool. Occupational frauds are more likely to be detected by a tip than by other means such as internal audits, external audits or internal controls. The importance of encouraging tips is evident in cases involving losses of $1 million or more. Forty-four percent of the million-dollar frauds in this study were detected by tips. This is more than twice the rate of detection by internal audits and three times the rate of detection by external audits.