How to Spot a FraudsterNew ACFE Report Profiles Fraud Schemes, Perpetrators
The Association of Certified Fraud Examiners has long tracked international fraud trends, and some themes are consistent: When it comes to insider fraud, the perpetrators tend to be older, senior-level men who have been on the job long enough to gained access and trust.
But what is surprising, says John Warren, VP and general counsel of the ACFE, is how fraudsters most commonly are caught. It isn't necessarily the sophisticated fraud detection technology or audit process that leads to their downfall.
"Surprisingly, despite all the advances in technology that we have, and the emphasis on controls ... we find every year that the most common form of detection is through a tip," says Warren, who co-authored the new ACFE study, Report to the Nations on Occupational Fraud and Abuse. The research reviews nearly 1400 cases of occupational, or insider, fraud reported by certified fraud examiners in more than 100 countries. In addition to the most common fraud schemes and fraudsters, the study reviews effective detection and prevention techniques. Key among them: whistle-blower programs.
"Usually somewhere between 40 and 45 percent of cases are caught by somebody simply telling somebody else 'I think this person is stealing' or 'I think this person is doing something unethical,'" Warren says. "You're about three times more likely to detect a fraud via a tip than any other method."
In an exclusive discussion about the ACFE's 2012 Global Fraud Study, Warren discusses:
- The most common occupational fraud schemes - and how they have evolved;
- The most effective fraud detection and prevention solutions;
- Top traits to watch for in prospective fraudsters.
Warren has served as general counsel of the Association of Certified Fraud Examiners since September 2004. He is chief legal officer of the ACFE, responsible for providing guidance, oversight and direction to ACFE management and staff on all legal issues that affect the association.
Aside from his legal responsibilities, Warren is also responsible for producing the Report to the Nation on Occupational Fraud and Abuse, a bi-annual report issued by ACFE on the costs and effects of occupational fraud. He also has worked on behalf of ACFE to develop the Institute for Fraud Prevention, a multidisciplinary academic research center and consortium of universities dedicated to preventing and deterring fraud and corruption through research and education.