CPA firms have opportunities here. Bonus: infographics.
By CPA Trendlines
Covid-19 isn’t the only pandemic ravaging the world. There’s a financial virus going around, too.
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It’s called fraud – maybe not contagious, but it pops up everywhere. On average, an estimated 5 percent of the world’s revenue is lost to fraud each year, a median loss of $125,000, an average loss of $1,509,000.
The prevalence and seriousness of fraud is both opportunity and obligation for CPA practices, not to mention internal audit departments.
According to the 2020 Global Study on Occupational Fraud and Abuse, just issued by the Association of Certified Fraud Examiners, external audits were the source of detection in only 4 percent of 2,504 organizations analyzed in 125 countries. Internal audits accounted for 15 percent of detection, and internal controls seem almost not worthwhile, finding only 2 percent of cases of known fraud.
Despite increasingly sophisticated fraud detection techniques, tips are still by far the most common way fraud is discovered, responsible for 43 percent of detected cases.
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