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Yes

29.2

$100,000

15

No

70.8

$200,000

24

Yes

45.2

$100,000

15

No

54.8

$200,000

24

45.9 54.1

$100,000 $200,000

15 24

59.0 41.0

$120,000 $218,000

18 24

75.4 24.6

$181,000 $125,000

23 18

Percent of

Median

Length of Scheme

Cases

Loss

(in months)

Exhibit 1.23

Surprise Audits

Hotline

Fraud Training Yes No Internal Audit Yes No External Audit Yes No

CORPORATE FRAUD HANDBOOK

2006 National Fraud Survey: Impact of Antifraud Measures on Median Loss

perpetrator, placing him on probation, and so on. In our survey, we asked respondents to indicate what adverse employment actions the victims in their cases took against the perpetrators.

Not surprisingly, the most common response by victims was to terminate the perpe- trator, which occurred in 83 percent of the cases we reviewed. (This does not mean that the perpetrators in the other 17 percent of the cases were allowed to keep working for the victim organizations. In many cases, the perpetrator quit or disappeared before the fraud was discovered, or immediately thereafter, before the victim organization had any op- portunity to take action). (See Exhibit 1.24.)

Criminal Referrals

Of the 1,072 CFEs who provided information about criminal referrals, almost 71 percent said that the victim organization referred their case to law enforcement. This figure was higher than might have been expected given frequent anecdotal evidence suggesting that organizations historically have been reluctant to have fraud perpetrators prosecuted. (See Exhibit 1.25.)

The median dollar loss in cases that were reported to law enforcement authorities was twice as high as the median loss in unreported cases, indicating that smaller frauds are more likely to go unreported. However, even in cases that did not get referred to law en- forcement, the median loss was still considerable, at $100,000. (See Exhibit 1.26.)

There were 684 cases referred to law enforcement in our 2006 study in which the re- spondents were able to provide information on the outcome of the cases. Almost half of these cases were still pending at the time of our study. Among cases that had reached their conclusion, the most common outcome was for the perpetrator to plead guilty or no

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