Forensic Accounting

One of the unexpected consequences of the pandemic was a significant increase in fraudulent behavior. It seems that fraud is now a fact of life in modern business, but there are ways that savvy business owners can reduce their chances of falling victim to this behavior.

In its Occupational Fraud 2022: A Report to the Nations, the Association of Certified Fraud Examiners compiled data from a study of 2,110 real cases of fraud, investigated in 133 countries, and totalling $3.6 billion in losses. It found occupational fraud to be the “most common form of financial crime in the world with 86% of cases falling under this category.” Occupational fraud is defined as “frauds that are committed by individuals against the organizations that employ them.” Though it is the most common, occupational fraud has the lowest median loss per case at $117,000. However, due to its prevalence, it is also “very likely the most costly” form of fraud.

Additional findings in the report included the following:

  • Approximately 5% of revenue is lost to fraud each year — equivalent to over $4.7 trillion worldwide (based on 2021 GWP: $94 trillion).
  • The average loss per case in the study was $1.78 million, with 21% of cases representing losses of over $1 million.
  • Those committing fraud are increasingly higher up the organizational ladder (from 56% in 2012 to 62% in 2022).
  • Men are increasingly committing fraud (from 65 % in 2012 to 73% in 2022). However, though women are committing less fraud (from 35% in 2021 to 27% in 2022), the gap in financial losses between the two genders has narrowed since 2012, with median losses for men dropping by $75k, and median losses for women rising by $9k.
  • Over half of survey respondents reported pandemic-related issues as a contributing factor to fraud, with staffing changes (42%) and remote work (15%) as the most common.
  • 8% of cases involved cryptocurrency, most commonly for a) bribery and kickbacks (48%), and b) converting misappropriated assets (43%).

The good news is that cases are being caught faster, as organizations put internal controls and oversight in place. Fraud controls can have a positive impact on both fraud losses and the efficacy of fraud detection. It is clear from the study that implementing fraud controls is successful in minimizing occupational fraud. 

Businesses that fail to take such measures, however, remain vulnerable to occupational fraud. This is especially true as new forms of fraud emerge, especially in the context of global events such as the pandemic and the development of new phenomena like cryptocurrency. While addressing occupational fraud may feel challenging, it doesn’t have to be. We can help.

At CJBS, our financial investigation and litigation support team is trained to:

  • Detect fraud
  • Uncover hidden assets
  • Provide due diligence services

Though fraud may seem to be a fact of life in modern business, it doesn’t have to be. We work with our clients to maximize positive outcomes for their business, including reducing losses and preparing for unexpected events. Connect with us today to learn more how we can help you implement fraud controls and safeguard your business.

CJBS offers the following forensic accounting services:

Litigation Support Services for:

  • Shareholder disputes
  • Malpractice
  • Business dissolutions
  • Bankruptcy accounting
  • Asset recovery and damage analysis
  • Full audit services
  • Calculating economic damages & lost profits
  • Preparation for deposing financial witnesses

Due Diligence Reviews:

  • Operational and financial analyses
  • Analytical reports
  • Evidence collection
  • Trend analysis

Risk Management and Internal Control Consulting:

  • Full risk assessment
  • Documentation
  • Design
  • Testing
  • Seminars and on-site training

We also specialize in the following areas:

  • Bankruptcy, Insolvency, and Restructuring 
  • Accountant malpractice
  • Matrimonial litigation 
  • Breach of contract
  • Corporate fraud and malfeasance

To learn more about the Forensic Accounting services available from CJBS, contact Lorena Johnson-Engelman or Larry Goldsmith.

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