ACFE

FORENSICS + FRAUD

While Forensics is the investigative application of systematic methods and techniques to uncover facts most often within judicial or legal contexts, as a subset, Fraud is an intentional act by one party to deceive or to misrepresent information with an intent to secure an unfair gain or unlawful advantage over others that often causes loss or harm to those unsuspecting parties

WHAT IS ACFE

Coming up to its 40’th anniversary, the ASSOCIATION OF CERTIFIED FRAUD EXAMINERS’ genesis was a casual conversation in 1985 between Donald Cressey, the Fraud Triangle’s foremost criminologist, and Dr. Joesph Wells, a CPA Accountant and FBI Agent. Based in Austin Texas, today the ASSOCIATION OF CERTIFIED FRAUD EXAMINERS (ACFE) is the world’s largest anti-fraud organization with over 200 Chapters supporting over 90,000 members in over 180 countries and also provides anti-fraud educational materials to over 300 Universities.

ACFE’S MISSION

The ACFE mission is to reduce the incidence of fraud and white-collar crime and to assist the Membership in fraud detection and deterrence by:

1. Demonstrating bona fide qualifications for Certified Fraud Examiners through administration of Exams;
2. Providing leadership in the integrity, objectivity and professionalism of Certified Fraud Examiners (CFE);
3. Requiring Certified Fraud Examiners to adhere to a strict code of professional conduct and ethics;
4. Serving as the international representative for Certified Fraud Examiners to business, government and academic institutions; and,
5. Setting high standards for admission, including demonstrated competence through mandatory Continuing Professional Education.

HISTORY OF FRAUD

Fraud is as old as old human civilization. Over 4,000 years ago, some Babylonians tampered with false measures and weights to cheat purchasers out of grains, goods, or precious metals. Some ancient Egyptians tampered with land deeds falsely to claim ownership of another’s land or property – perhaps the first cases of “Title Fraud”. When coins became the standard exchange medium in the ancient Greek and Roman empires, soon thereafter both counterfeit coins begam to circulate or fraudsters would “clip” coins by shaving the edges of the silver and gold coins. Some Mesopotamians schemed to collect from investors by deliberately sinking ships carrying their goods, or even falsely claiming such sinkings and redirecting those ships to other designations.

Perhaps the best known, and widely practised fraud scheme of the 20th century, was that of Charles Ponzi who, without creating any business activities with legitimate profits, paid excessively high rates of returns to early investors by redistributing funds from newer investors with an ultimate collapse of his scam.

COST OF FRAUD

Aside from their illicit endeavours, fraudsters create an infinite, and ever-growing, number of scams to bilk victim out of money, property, or rights.

Based on a survey of over 130 nations and approximately 2,000 cases, the Association of Certified Fraud Examiners (ACFE) estimates that 5% of an organization’s revenue is lost to fraud each year. While “Asia Pacific” had the highest losses per region, Canada and the United States were tied with “Southern Asia”, both ranked 7th out of 8 geographic regions.

Overall “Asset Misappropriation” is the most common category of Occupational Fraud followed by “Corruption” and then “Financial Statement Fraud”. However, even though “Financial Statement Fraud” was the least common scheme (5%), it represented the most costly at $766,000 (USD) which was over 6 times that of “Asset Misappropriation”.