Skip to 0 minutes and 1 secondWho perpetrates fraud? Maybe not who you'd expect. In this video, we're going to use the Association of Certified Fraud Examiners' Report to the Nations again. So let's first look at the perpetrator's position within the company. You've got employees, managers, owner/executives and other. And as you can see, one of the strongest indicators of the size of the loss in an occupational fraud scheme is the position the perpetrator holds within the victim organization. The higher up the perpetrator is, the more costly their frauds are to the organization. As you can see, schemes committed by managers and executives are significantly costlier than the frauds committed by rank and file employees. Such a relationship should be expected.

Skip to 0 minutes and 40 secondsThe higher level employees have a higher degree of control over a company's assets. Now, let's look at the perpetrator's age. There is a direct correlation between age and median loss related to fraud. What we have here is the perpetrator's age organized

Skip to 0 minutes and 55 secondsinto nine different categories: starting at under 26, ending at over 60. And what you can see is the older your perpetrator is, the more costly their frauds are to the organization, which makes sense. Older individuals tend to be higher up in the organization. They have the ability to override internal controls. And they're in trusted positions, which enables them to do so. Now, let's look at education. There's a direct correlation between education of the perpetrator and median loss of their fraud. What we have here is the education level

Skip to 1 minute and 26 secondsof the perpetrator organized into four different categories: high school graduate or less, some university, university degree and postgraduate degree. As you can see, the more educated the perpetrator is, the more costly their frauds are to the organization -- which makes sense. Individuals with higher degrees of education tend to be higher up in the organization. They are in positions that are trusted, and enable them to override internal controls. So you've learned a little bit about who these perpetrators are. Let's talk about how they're trying to hide their crimes. The way the perpetrator hides their crime does not vary much based on the type of fraud being perpetrated. So just as a reminder, that's asset misappropriation, corruption, and financial statement fraud.

Skip to 2 minutes and 10 secondsWhat the Association of Certified Fraud Examiners' Report to the Nations shows is that creating and altering physical documents is by far the most common way perpetrators try to hide their crimes. What I'm seeing in my work is a trend towards altering and creating data as a way to hide crimes, which is why techniques like Benford's Law are essential to any fraud investigation. Because the fraud is in the data.

Fraudsters: how damaging can they be?

In this video, we look at who commits fraud, and explore how the cost of a fraud is affected by the perpetrator’s age, position in the company and level of education.

We also discuss some different ways that perpetrators hide their fraud schemes.

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This video is from the free online course:

The Data Explosion and its Impact on Fraud Detection

Kogod School of Business at American University

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