This whitepaper outlines proactive steps companies can take to avoid employee fraud and fraudulent payments – a growing problem that will only accelerate in a strong economy.
Despite organizations recognizing the threat and actively implementing controls to reduce payments fraud, tactics are becoming more sophisticated and success more frequent.
The whitepaper shows how occupational fraud (using one’s occupation for personal gain) cost businesses over $7 billion in just 21 months. At an average of $130,000 per case and an elapsed time of 16 months before a scheme is discovered, an estimated 50% of fraud cases can be directly attributed to a lack of internal controls.
Indirect spend, generally accounting for 15-27% of a company’s total revenue, is where the majority of occupational fraud takes place. The paper outlines six controls to reduce indirect procurement and payments fraud from going undetected.
According to the 2019 AFP Payments Fraud and Control Survey, “more than 80 percent of financial professionals report that their organizations were targeted by fraudsters in 2018, the largest percentage since the Association of Financial Professionals® (AFP) began tracking such activity” in 2005.
Unsurprisingly, one of the reasons employee and company fraud has hit new heights may be that the economy is booming. As rapid growth boosts the number of transactions a company handles, new opportunities to commit fraud arise.
Controls are often bypassed or overridden as current staff struggle to manage increased workloads. New hires take advantage of lax recruitment practices put in place to fill positions quickly. While only four percent of perpetrators have a prior fraud conviction, businesses may be infiltrated for the express purpose of conducting fraudulent activities.