Occupational fraud has been a persistent issue in labor relations since time immemorial. While technology and times have changed, the schemes employed by fraudsters have remained surprisingly consistent.

According to the “Occupational Fraud 2022: A Report to the Nations” by the Association of Certified Fraud Examiners (ACFE), three main categories define the problem: financial statement fraud, corruption, and asset misappropriation. We explore each category, highlighting notable examples and statistics to understand their implications better.

Financial statement fraud

Although less common (9% of cases), financial statement fraud inflicts the most significant financial damage on victim organizations, with a staggering average cost of $593,000 per case. The landmark example is Lehman Brothers, where weak internal controls allowed executives to engage in illegal activities, resulting in substantial misrepresentation of financial statements.

Corruption

Corruption, encompassing conflicts of interest, bribery, illegal gratuities, and economic extortion, accounts for 50% of occupational fraud cases. With a median loss of $150,000 per case, corruption remains prevalent worldwide.

Asset misappropriation

Asset misappropriation is the most frequent category, constituting 86% of occupational fraud cases. Despite causing the lowest median loss per case ($100,000), it highlights the diverse methods employed by fraudsters.

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