A survey of fraud examiners who investigated 959 cases of occupational fraud between January 2006 and February 2008 found that a hotline is an effective tool for anti-fraud controls. Of the 417 cases in the study in which the company had a hotline at the time of the fraud, 216 of those cases, or 52 percent, were intially detected by a tip. And 63 percent of the tips came through the hotline when it involved fraud by a manager or executive, suggesting employees afraid of retaliation are most comfortable using an anonymous hotline to report fraud.

The Association of Certified Fraud Examiners (ACFE) published the results of the survey in its 2008 Report to the Nation on Occupational Fraud & Abuse. The report estimates that U.S. organizations lose 7 percent of their annual revenues to fraud. When applied to the projected 2008 United States Gross National Product, the 7 percent figure translates to approximately $994 billion in fraud losses.

The report also found that:

• The median loss caused by the occupational frauds in this study was $175,000. More than one-quarter of frauds involved losses of at least $1 million.
• Schemes frequently continue for years before they are detected. The typical fraud in our study lasted two years from the time it began until the time it was caught by the victim organization.
• Frauds were most often committed by the accounting department or upper management, and most fraudsters were first-time offenders. Only seven percent of fraud perpetrators in the study had prior convictions and only 12 percent had been previously terminated by an employer for fraud-related conduct.
• Occupational frauds are much more likely to be detected by a tip than by audits, controls or other means.
• Small businesses are especially vulnerable to occupational fraud.
• Seventy-eight percent of victim organizations modified their anti-fraud controls after discovering that they had been defrauded.

The report also details findings such as how organizations were impacted based upon industry, how the implementation of anti-fraud controls affected exposure to fraud, and the most common behavioral traits observed among fraud perpetrators.