Friday, 28 November 2014
We recently published an article on “How could you commit fraud? Capitalise on your employees’ knowledge when it comes to Fraud Risk Management.” The article highlighted a recent report which found that 32.2% of all recorded instances of fraud occurred in organisations that lacked the appropriate controls1. The article went on to look at how an organisation can harness the knowledge of its employees to, firstly, identify weaknesses in their controls and secondly, to implement steps to strengthen their fraud risk management processes. 
One of the key aspects to identifying weaknesses and opportunities for people to engage in fraudulent activity is profiling those in an organisation who are most likely to perpetrate a fraud. By profiling those who are statistically most likely to conduct fraud, appropriate controls can be put in place to mitigate against those risks. 
Set out below are some key statistics2  collated by the ACFE that can assist in the identification of key fraud risks by profiling those individuals within your organisation that are a higher risk of committing fraud. It is not to say that if an employee matches the profile they are involved in fraudulent conduct, but rather provides food for thought when evaluating your organisation’s key fraud risks.
As well as profiling, it’s also useful to consider if people exhibit Red Flags3, such as:
1. Living beyond one’s means (This is the biggest behavioural red flag)
2. Financial Difficulties
3. Unusually close relationships with customers/vendors
4. Unwillingness to share duties (e.g. takes very few holidays)
5. ‘Wheeler-dealer’ attitude.
Do any of these ring alarm bells for you in your organisation?
If you do identify red flags indicative of fraud and a decision is made to investigate, the first 48 hours of the investigation is critical. In our next Forensic Matters article, we will look at the steps you can take in the first 48 hours of an investigation to ensure that you secure relevant evidence and give your investigation the best chance of success.

1. Page 39 of the ACFE Report to the Nations 2014.
2. Graphs extracted from “Report to the nations on Occupational Fraud and Abuse 2014” compiled by the Association of Certified Fraud Examiners (ACFE).
3. Page 59 of the ACFE Report to the Nations 2014.