Fighting Fraud: A Review of the ACFE Report
The way businesses operate has changed drastically during the COVID pandemic. In many cases these changes are here to stay. With so many of us now working remotely it brings new challenges to the management and prevention of fraud. We reviewed the recently published survey by the Association of Certified Fraud Examiners (ACFE), in combination with Grant Thornton, and pulled out pieces we think may be of value to our clients. Read on for a summary of their findings.
Key Findings
- 51% of organizations have uncovered more fraud since the onset of the pandemic
- 71% expect the level of fraud impacting their organization to increase over the next year
- 38% of organizations increased their budget for anti-fraud technology for fiscal year 2021, making this the most common area for increased investment within anti-fraud programs
- More than 80% of organizations have already implemented one or more changes to their anti-fraud programs in response to the pandemic
Fraud Growth Segments
We can see by the key findings above that a majority of the respondents have seen, and/or are expecting to see, an increase in fraud post-pandemic. It is not enough, however, to say that fraud is increasing, it is important to look at the types of fraud that are increasing in order to get a full picture. With the expanded remote work environment, the types of fraud that businesses are anticipating the most growth in include cyber fraud and social engineering. These two categories include the majority of online fraud types we hear about regularly in the news: email compromise, hacking, ransomware, malware, phishing, brandjacking, etc. While the growth in these segments is not exclusively due to the pandemic and remote work environments, the changes to the way we do business and the way consumers interact with our businesses is definitely changing the landscape of fraud prevention.
Fraud Prevention Challenges
Since the ACFE is showing us that the majority of respondents are concerned about an increase in fraud, the next logical step is to look at how we prevent additional occurrences and safeguard our businesses going forward. According to the study, a significant number of respondents saw an increase to their fraud prevention budgets for 2021. What drove the increase? According to the survey, the most common area for increased investment was anti-fraud technology. On the other hand, companies actually saw a decrease in spending related to investigations of fraud due to limited travel for their anti-fraud employees. Going forward, overall budgets for fraud prevention and investigation are expected to continue to increase post-pandemic.
How Can SDK Help?
There is a lot of relevant information in the ACFE report, and a lot of information that can look scary if you are not prepared for it. At SDK our Forensic Accounting and Valuation Services department is here to help our clients in any way we can. Our team of Certified Public Accountants (CPAs), Certified Fraud Examiners (CFEs), Accredited Business Valuators (ABVs), and Certified in Financial Forensics (CFFs) will work with you to identify your company’s specific needs and bring you relevant solutions. Reach out to one of our Senior Managers, Ryan Stretmater, today with any questions at rstretmater@sdkcpa.com or 612-332-9351.
Association of Certified Fraud Examiners. (2021) The Next Normal: Preparing for a Post-Pandemic Fraud Landscape https://www.acfe.com/covidreport-download.aspx