Statistics Show Fraud Hotlines Make a Difference

The Association of Certified Fraud Examiners just released its 2018 Report to the Nations (RTTN) on Occupational Fraud and Abuse. With great anticipation, I flipped to the area regarding the effect of hotlines in detecting fraud. As expected, a tip is still the top way fraud is detected, more than twice that of any other method at 40 percent. The page on hotlines is a must-see infographic this year. Here are some interesting statistics:

  • 63 percent of victim organizations have hotlines. I spend most of my time investigating fraud at organizations that didn’t have a hotline.
  • Organizations without hotlines are more than twice as likely to detect fraud by accident or external audit. No one wants to rely on an “accident” to detect fraud. In addition, external auditors are responsible for identifying material misstatements due to fraud. What is immaterial to an auditor may be quite material to you.
  • 50 percent of corruption is detected by tip. Corruption is the hardest fraud to uncover and investigate, as it is “off book.” This is easily the best argument for why every organization needs a hotline.

A good trend is that more organizations are using hotlines than in 2016. The RTTN states 63 percent of organizations have hotlines, which is up from 60.1 percent in 2016 and 54 percent in 2014. Until this number reaches 100 percent, I’ll continue to emphasize the importance of every organization having a fraud hotline.

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Julia is a director in BKD’s Forensics & Valuation Services division. She focuses on forensic accounting, fraud investigation, litigation support services and business valuation. With nearly 20 years of public accounting experience, Julia has gained a substantial background in both audit and tax services.

She has extensive experience in forensic services and litigation support. She has successfully worked with complex risk assessments and public corruption investigations, misappropriation of assets and fraudulent financial reports in a variety of industries, including health care, manufacturing, transportation, real estate, IT consulting, government and not-for-profit. Julia performs valuations for transactions, litigation, restructuring, marital dissolutions and income tax-related purposes.

Julia Mast – who has written posts on BKD Forensics.


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