ACFE's "2006 Report to the Nation on Occupational Fraud and Abuse" is based on 1,134 fraud cases examined by Certified Fraud Examiners (CFE).

The report reveals fraudulent financial statements were the costliest form of occupational fraud, with a median loss of $2 million. Asset misappropriation was the most common type of occupation fraud, occurring in 91.5 percent of all reported cases, with a median loss of $150,000. Corruption occurred in 30.8 percent of all reported cases, with a median loss of $538,000. 

Another finding of the report: certain anti-fraud controls, such as a fraud hotline, can have a measurable impact on an organization's exposure to fraud. In the cases reviewed, organizations that suffered a median loss of $100,000 had an anonymous fraud hotline, whereas organization's without this hotline suffered a median loss of $200,000.

The study also found that occupational frauds are more likely to be detected by a tip than by other means such as internal audits, external audits or internal control.

ACFE's report comes months after the founder and chairman of the ACFE, Joseph T. Wells, CFE, CPA, expressed fears that the nation's CPAs are not trained to fight accounting fraud.

"As a group, CPAs are neither stupid nor crooked. But the majority are still ignorant about fraud," explained Wells. "That's because for the last 80 years, untrained accounting graduates have been drafted to wage war against sophisticated liars and thieves. And as multi-billion dollar accounting failures have shown, it hasn't been much of a fight."

Although the report's estimate of overall fraud losses is based on the collective insight of hundreds of anti-fraud professionals, the true amount of fraud taking place in U.S. businesses cannot really be known.

"Fraud, by its nature, is hidden, and so the true amount of fraud taking place in U.S. businesses at any one time cannot be calculated," said John Warren, General Council, ACFE, "Even attempts to measure the amount of fraud that has already been detected will lead to incomplete results."

Warren explained that many fraud cases go unreported, either because the victim organizations do not recognize that they have been defrauded, because they choose not to report the crimes for fear of bad publicity or simply because they do not want to deal with the repercussions. He cited the lack of a central repository for collecting fraud-related data as an impediment to determining precisely how big the problem is.

"The one thing we do know for certain," said Warren, "is that occupational fraud imposes tremendous costs on U.S. organizations."

Download a copy of the complete 2006 Report to the Nation (PDF) here: http://www.acfe.com/about/press-release-06-20-2006.asp.

The anti-fraud organization will host its annual fraud conference in Las Vegas on July 9-14.