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REPORT TO THE NATIONS
O N O C C U PAT I O N A L F R A U D A N D A B U S E

2010 Global Fraud Study

Letter from the president

When the ACFE published its first Report to the Nation on Occupational Fraud and Abuse in 1996, it broke new ground in anti-fraud research by providing an analysis of the costs, the methodologies and the perpetrators of fraud within U.S. organizations. Thecollective body of knowledge contained in the first five editions of the Report to the Nation — published between 1996 and 2008 — has become the most authoritative and widely quoted research publication on occupational fraud. Now, for the first time, the data contained in the Report have been drawn from fraud cases throughout the world. As readers will see, it reflects the truly universal nature ofoccupational fraud. This expansion of our research is denoted in the modified title for this study, which has now become the Report to the Nations on Occupational Fraud and Abuse. The information contained in this report is based on 1,843 cases of occupational fraud that were reported by the Certified Fraud Examiners (CFEs) who investigated them. These offenses occurred in more than 100 countries onsix continents, and more than 43% took place outside the United States. What is perhaps most striking about the data we gathered is how consistent the patterns of fraud are around the globe. While some regional differences exist, for the most part occupational fraud seems to operate similarly whether it occurs in Europe, Asia, South America or the United States. The Report to the Nations is thebrainchild of the ACFE’s founder and Chairman, Dr. Joseph T. Wells, CFE, CPA who throughout his career has contributed more to the study of fraud and the development of the anti-fraud profession than any other person. On behalf of the ACFE, and in honor of its founder, Dr. Wells, I am pleased to present the 2010 Report to the Nations on Occupational Fraud and Abuse to practitioners, business andgovernment organizations, academics, the media and the general public throughout the world. The information contained in this Report will be invaluable to those who seek to deter, detect, prevent or simply understand the global economic impact of occupational fraud.

James D. Ratley, CFE President, Association of Certified Fraud Examiners

2 | 2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUDANd AbuSE

Table of Contents
executive summary .............................................................................................................................................................4 introduction ..........................................................................................................................................................................6 thecost of occupational Fraud ..........................................................................................................................................8 • Distribution of Losses How occupational Fraud is committed ............................................................................................................................10 • Asset Misappropriation Sub-Schemes •Duration of Fraud Schemes detection of Fraud schemes .............................................................................................................................................16 • Initial Detection of Occupational Fraud Schemes • Source of Tips • Impact of Hotlines • Detection Methods Based on Organization Type • Detecting Fraud in Small Businesses • Detection ofOccupational Fraud Based on Region Victim organizations ..........................................................................................................................................................24 • Geographical Location of Organizations • Type of Organizations • Size of Organizations • Methods of Fraud in Small Businesses • Industry of Organizations • Anti-Fraud Controls at Victim...