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What Is Fraud?

What every CEO or Business Owner should know:

According to Joseph T. Wells in his 1996 Report to the Nation on Occupational Fraud and Abuse (The Association of Certified Fraud Examiners), known also as "The Wells Report" and documented more fully in his recently published landmark work, Occupational Fraud and Abuse (Obsidian, 1997); "Fraud and abuse costs U.S. organizations more than $400 billion annually." Yet, surprisingly, smaller organizations, defined in his work as "those with 100 employees or less...," are most often the victim. Larger organizations typically can afford the internal control checks and balances needed to deter many of the more significant fraud and embezzlement schemes. Small companies often must TRUST key individuals. And unfortunately, those organizations that can least afford internal controls, can also, least afford a major fraud. The Bankruptcy courts abound with such cases.

As far as who was the Fraudster ( i.e. the perpetrator ), the "Wells Report" further determined that ordinary employees were twice as likely as a manager to be the fraud perpetrator. But, when managers were the fraudsters, the average loss was $250,000 per occurrence, four times as high as the average employee theft ! Owner/executive driven losses were even higher on average at about $1,000,000 per occurrence!

Click Here to read the Wells Report in full. (Get Adobe Reader.)

Occupational fraud and abuse, debtor fraud, and all other financial fraud schemes can be detected but not always deterred. The FraudDetectives website is your only web-based source of pre-qualified professional help.