What You Should Know About Employee Theft
Employee theft (or occupational fraud) happens to businesses of all sizes, in all industries. Internal fraud perpetrated by an employee, manager or executive against his or her own company costs businesses big money.
How much are businesses losing?
- Global losses to occupational fraud are more than $3.6 billion.
- Organizations lose five percent of their revenue to fraud every year.
- $117,000 is the median loss per case.
Who’s committing employee fraud?
- 73% of fraudsters are men.
- 65% have a university or higher degree.
- 62% are owners, executives, or managers.
- 54% are between the age of 31 and 45.
Perpetrators older than 60 cause the greatest losses - $800,000.
More than 50% of employee theft is committed in four departments.
- Operations (15%)
- Accounting (12%)
- Executive/upper management (11%)
- Sales (11%)
There are three typical fraud schemes in the U.S.
- Corruption (37%)
- Extortion, bribery, conflicts of interest
- Asset misappropriation (24%)
- Billing schemes, fictitious or inflated invoices, larceny
- Non-cash (18%)
- Expense reimbursements (17%)
Globally, financial statement fraud is the least common (9%) but most costly ($539k median losses).
Most occupational fraud is concealed via documentation.
- 39% created fraudulent physical documents.
- 32% altered physical documents.
- 28% created fraudulent electronic documents or files.
- 25% altered electronic documents or files.
- 23% destroyed or withheld physical documents.
Most common U.S. occupational fraud prevention controls...
- Code of conduct (74%)
- External audit of financial statements (72%)
- Employee support programs (66%)
- Internal audit department (66%)
Why are internal controls ineffective?
- Lack of internal controls (29%)
- Override of existing internal controls (20%)
- Lack of management review (16%)
- Poor support from executives (10%)
- Lack of competent personnel in oversight roles (8%)
The typical fraud case lasts 12 months before detection.
Common means of detection in the U.S.
- Tips (32%)
- Internal audit (18%)
- Management review (16%)
(Source: Association of Certified Fraud Examiners, “Occupational Fraud 2022: A Report to the NationsTM,”2022)
For more information on how Synovus can assist in protecting your business from fraud, complete a short form and a Synovus Treasury & Payment Solutions Consultant will contact you with more details. You can also stop by one of our local branches.