PRESS RELEASE: Corporate Fraud may intensify as cost-of-living pressures increase

CORPORATE FRAUD MAY INTENSIFY AS COST-OF-LIVING PRESSURES INCREASE
Moore Australia Forensic Accounting experts warn Australian business owners to be vigilant.

• USD $5 trillion (AUD $7.6 trillion)* lost to corporate fraud globally, estimated by ACFE,
• USD $200,000 (AUD $300,343) median loss in Asia Pacific observed cases,
• Corruption (56%) and Billing fraud (21%) are most common observed fraud schemes in Asia Pacific,
• Tipoffs/Whistleblowing, Management reviews and Internal and External audits most common initial detection methods in Asia Pacific,
• 61% of organisations observed in Asia Pacific made no recovery of losses.

Following the Association of Certified Fraud Examiners’ (ACFE) (https://www.acfe.com/) publication of “Occupational Fraud 2024: A report to the Nations” (https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2024/2024-report-to-the-nations.pdf), Moore Australia (www.moore-australia.com.au) forensic audit and accounting experts warn Australian business owners of the importance of remaining vigilant about corporate fraud. The ACFE report examined 1,921 cases from 138 countries and territories, causing losses of more than USD $3.1 billion (AUD $4.5 billion).

Occupational fraud is a team sport
Corporate fraud or occupational fraud occurs when one or more staff members defraud the organisation that employs them. According to the study performed by the ACFE, financial crime is mainly committed through fraud schemes such as Financial Statement Fraud, Corruption, and Asset Misappropriation, though it is common for a combination to occur. In the majority of cases (54% according to ACFE), collusion occurs, where multiple perpetrators work together to commit a crime.

Once they have committed a fraud, perpetrators attempt to hide their actions through the creation of fraudulent physical documents (41% of cases) or altered physical documents (37% of cases).

Occupational fraud prevention is an even greater team sport
There are a number of ways in which organisations can effectively reduce their exposure risk to occupational fraud. For example, fraud awareness training, internal audits, external audits, management reviews, whistleblower infrastructure and surprise audits. The measures and quality of the controls put in place have a major impact on the size of the loss and the speed with which a fraud case is resolved.
According to the study, organisations that did not provide fraud awareness training lost nearly double those who did not train employees or managers/executives.

Perpetrators can potentially display a number of behavioural red flags such as living beyond their means (39% of observed cases) and financial difficulties (29% of observed cases). With adequate and regular fraud awareness training, employees will be more vigilant and likely to recognise these red flags.

Nick Goosen (https://www.moore-australia.com.au/people/nick-goosen), a Director at Moore Australia (WA) and a member of the ACFE with over 30 years’ experience in forensic accounting and audit, commented:
“As part of the overall governance structure, organisations should take time and effort to implement robust fraud prevention and detection measures to safeguard their organisation from potential losses. Organisations of any size will be less exposed to fraud risks if they train their staff, ensure adequate governance processes are in place and have this as a standing agenda item on their governance committee agendas.”
“We live in a society where people are faced with increasing economic pressure, and continued peer pressure to maintain a certain lifestyle. The cost-of-living crisis is having a real and persistent effect on people’s ability to put food on the table.

* all USD amounts from original ACFE publication. Conversion to AUD made on 12 June 2024, rounding differences may occur.

Moore Australia (www.moore-australia.com.au) is a network of independent tax, audit, and advisory firms with 550+ staff members and offices across Australia. Moore Australia is also an independent member of the Moore Global network (www.moore-global.com), the 11th largest professional services network in the world.

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Notes to editor:
The Association of Certified Fraud Examiners’ (ACFE) (https://www.acfe.com/) publication of “Occupational Fraud 2024: A report to the Nations (https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2024/2024-report-to-the-nations.pdf) can be accessed through their website , and should be consulted to form a holistic view of Occupational Fraud.

About the Moore Australia Network
Moore Australia is a network of independent tax, audit, and advisory firms in Australia with 550+ staff members. Moore Australia is an independent member of the Moore Global Network – the 11th largest accounting network in the world – providing tax, auditing, and financial reporting services, advising local, national, and international clients in the public and private sectors.
Moore Australia has extensive experience in state and local government, biotechnology, energy mining and renewables, health and aged care, education, manufacturing, not for profit, property and construction, retail and tourism and hospitality and has a strong presence in the following service lines: Asia Desk, Audit & Assurance, Business Advisory, Taxation, Corporate Finance, Governance and Risk Advisory and Forensic Audit and Accounting.