Business Fraud – Study Says It’s Not Going Anywhere

February 8, 2013 by Charles W. Schulze, CPA, CFF, CFE

A typical business loses about five percent of its annual revenue to fraud. That statistic comes from the most recent study conducted by the Association of Certified Fraud Examiners. And while this number has been holding steady for several years now, what has changed from my point of view are the statistics for the Southeast. In my experience, our region has averaged half of the global norm in prior years; but today, I believe we are approaching that five percent threshold.

What does that mean to Southeastern business owners?  If you experience a fraud, you can reasonably expect to lose at least $140,000 in an 18 month period. In many cases this is going to exceed an owner’s compensation.  Another item of note is that this is the median loss for all frauds; therefore, small business is definitely hurt more than large business.

Are there any behavior issues to watch for?  Four behavior patterns were found in the vast majority of cases. In more than 60 percent of the cases, living beyond one’s means and personal financial problems were the issues. Close relationships with customers or vendors accounted for 19 percent of the issues. Lastly, 18 percent of the problems were traced back to excessive control issues.

Click here to read the full article which originally appeared in UpstateBizSC and MidlandsBiz.