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.