Private Companies

In its 2014 Report to the Nations survey, the Association of Certified Fraud Examiners (ACFE) reported its research findings on the frequency, median loss, and detection methods of occupational fraud. The findings were drawn from an ACFE survey of victims of occupational fraud. If you are a private business, you need to be aware of these figures, which may already be affecting your bottom line.

• The survey participants estimated that the typical organization loses 5% of revenues each year due to asset misappropriation, corruption, and financial statement fraud.
• The median loss due to fraud suffered by the survey participants was $145,000.
• Tips were consistently the most common method of detecting occupational fraud schemes. Over 40% of all reported cases were discovered because of a tip – more than twice the rate of any other detection tool including data analytics.
• Employees accounted for nearly half of all tips.
• Nor surprisingly, organizations with tip hotlines were much more likely to detect a fraud by way of a tipster.
• The smallest organizations tend to suffer disproportionately large losses. Canada’s smaller firms are simply more vulnerable and feel fraud’s impact more acutely than larger entities.
• Finally, the frauds experienced by organizations with an effective tip line were 41% less costly and detected 50% quicker than frauds discovered by companies with no tip line in place.

You need a tip line because your firm is vulnerable to occupational fraud. You should assume that it is happening inside your company right now. Your employees, your vendors, even your competitors might very well be aware of activities inside your company that are raising red flags of concern. Listen to them.

You need to provide these potential tipsters and whistleblowers with an effective and efficient mechanism to report their suspicions to you. Being a whistleblower is not without its risks, and you also need to protect your tipsters from reprisals.

Your program needs to be trustworthy and credible. The tipsters and the fraudsters need to see that your company takes whistle blowing seriously. They need to see a robust response, and the tone needs to be sent from the top level of your organization. Your employees need to trust your program and the quality of the investigation. Clarium Fraud and Compliance Solutions can help you.

Trust Clarium to:

• Design and develop effective policies and procedures for receiving and analyzing tips and disclosures,
• Thoroughly and professionally manage the tips and investigate the fraud scheme,
• Provide you with concise and well-researched investigative reports and recommendations, and
• Investigate reprisals and attempted reprisals against your tipsters.

Having an effective tip line for whistleblowers is a resource multiplier for your company. It will increase the odds that a fraud scheme will be detected, lower the loss you incur, and even act as a deterrent to those employees who would steal from you.