Fraud has gained high visibility in the days since the Enron story broke, but small businesses may be the most vulnerable.
The Minnesota Bankers Association compiled information released from a report by the Association of Certified Fraud Examiners. The examiners reported small businesses are the most vulnerable to occupational fraud and abuse.
Some of the findings include:
* The average scheme in a small business causes $127,500 in losses. The average scheme in the largest companies costs $97,000.
* More than 80 percent of occupational fraud -- asset misappropriation, corruption or fraudulent statements -- involve asset misappropriations. Cash is the targeted asset 90 percent of the time.
* Frauds committed by employees cause median losses of $60,000, while frauds committed by managers or executives cause median losses of $250,000. When managers and employees conspire in a fraud scheme, the median loss rises to $500,000.
* Organizations with fraud hotlines cut their fraud losses by about 50 percent.
* The typical occupational fraud perpetrator is a first-time offender. Only 7 percent of occupational fraudsters in this study were known to have prior convictions for fraud-related offenses.
* The most common method for detecting occupational fraud is through tips from employees, customers, vendors and anonymous sources. The second most common method of discovery is by accident.
* Losses caused by perpetrators older than 60 are 27 times higher than losses caused by employees 25 and younger.
* The average fraud scheme lasted 18 months before it was detected.
Source: Minnesota Bankers Association.
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