Average fraudster is middle aged man with clean record

3 September 2010 | By Samuel Dale

Behavioural red flags, tenure at an organisation, position and educational background are all criteria examined in the ACFE’s 2010 Report to the Nations on Occupational Fraud Abuse.

The Report is drawn from a survey of Certified Fraud Examiners who investigated fraud cases between January 2008 and December 2009.

In addition to studying the traits of perpetrators, the Report includes data on how occupational fraud is committed and detected, as well as the characteristics of the victim organisation.

Only 7% of the perpetrators had been previously convicted of a fraud offence.

For the first time, the Report includes global data among the 1,843 cases of fraud that were studied.

Frauds committed by owners or executives were more than three times as costly as other frauds and harder to detect.

More than 80% of the frauds in the study were committed by individuals in accounting, operations, sales, executive management, customer service or purchasing.

Fraud perpetrators often display warning signs that they are engaging in illicit activity.

The most common behavioural red flags displayed by the perpetrators in our study were living beyond their means 43% of cases, and experiencing financial difficulties, 36% of cases.

James Ratley, president of ACFE, says: “Fraudsters exhibit behavioural warning signs of their misdeeds. It’s important to remember that this human element of fraud – demonstrated in red flags such as living beyond one’s means or exhibiting control issues — is not identified through an audit or other traditional controls.

“This is why the staff at any organisation should be trained to recognise these and other common behavioural signs that a fraud might be occurring. Moreover, they should be encouraged not to ignore such red flags, even when discovered by accident, as they might be the key to detecting or deterring a fraud.”