The Stats Are In!  Fraud Hotlines Make a Difference

The Association of Certified Fraud Examiners just released “Report to the Nations:  2018 Global Study on Occupational Fraud and Abuse” (RTTN). With great anticipation, I flipped to the area regarding the effect of hotlines in detecting fraud. As expected, a “tip” is still the number one way fraud is detected—more than twice that of any other method, at 40 percent. I found the page specifically on hotlines, and it’s an infographic this year—a must-see! Here are some interesting stats:

  • Sixty-three percent of victim organizations have hotlines. I spend most of my time investigating fraud at organizations that didn’t have a hotline.
  • Organizations without hotlines are more than twice as likely to detect fraud by accident or external audit. No one wants to rely on an “accident” to detect fraud. Further, external auditors are responsible for identifying material misstatements due to fraud. What is immaterial to an auditor may be quite material to you.
  • Fifty percent of corruption is detected by tip. This is fabulous! Corruption is the hardest fraud to uncover and investigate, as it’s “off-book.” This is hands-down the best argument for why every organization needs a hotline.

Check out the full report and scroll to page 19 to see the hotline infographic.

A good trend is that more organizations are using hotlines than in 2016. The RTTN found that 63 percent of organizations have hotlines, which is up from 60.1 percent in 2016 and 54 percent in 2014. Until this number reaches 100 percent, I’ll continue to emphasize the importance of a fraud hotline to every organization in my path.

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jmast

Julia is a member of BKD’s Forensics & Valuation Services division and focuses on forensic accounting, fraud investigation, litigation support services and business valuation. She has 17 years of public accounting experience, which includes a background in audit and tax services.

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