This month, the Association of Certified Fraud Examiners (ACFE) will release its 2010 “Report to the Nation on Occupational Fraud and Abuse,” a study of more than 1,800 cases of corporate fraud — 60% of which occurred in the United States (see “Something Wicked This Way Comes“). How much do you know about corporate confidence games?
1) Getting a tip from an informant is the most common way companies around the globe detect white-collar crime. What percentage of corporate fraud is caught by internal auditors?
2) Since 2008, which antifraud measure has reduced corporate losses by nearly 60%?
B. Job rotation/mandatory vacations
C. Fraud training for employees
D. Stringent computer-password policies
3) Control weaknesses are the primary suspect when it comes to corporate fraud. Which specific aspect was cited by fraud examiners as allowing the most malfeasance?
A. Lack of internal controls
B. Override of existing internal controls
C. Lack of independent checks/audits
D. Poor “tone at the top”
4) White-collar crimes perpetrated by owners and executives in 2008 — with median losses of $834,000 — outstripped losses related to crimes committed by nonmanagement employees by what margin?
A. 2 to 1
B. 5 to 1
C. 9 to 1
D. 20 to 1
5) Often, fraudsters can’t help but give themselves away. What’s the most common behavioral warning sign of corporate fraud?
A. Complaining of financial difficulties
B. Refusing to take vacations
C. Friendly with vendors/customers
D. Living beyond one’s means
6) More than 80% of all corporate frauds were committed by employees in six departments. Which department topped the list, with 22% of the crimes and median estimated losses of $180,000?
C. Senior management
7) In March 2008, the FBI and the Department of Justice orchestrated a three-month national mortgage fraud “takedown” resulting in charges against 406 defendants. What was the name of the operation?
A. Operation Subprime Time
B. Operation House Hunters
C. Operation Malicious Mortgage
D. Operation Roof on Fire
8) The ACFE study notes what salient fact regarding 80% of fraudsters?
A. They have no previous fraud convictions.
B. They have been through at least one IRS audit.
C. They have rotated through several corporate functions.
D. They have relocated with the company at least once.
Sources: Association of Certified Fraud Examiners’s “2010 Report to the Nation on Occupational Fraud and Abuse,” Federal Bureau of Investigation
Answers: 1–C; 2–A; 3–A; 4–C; 5–D; 6–B (customer service and operations round out the top six);