Banner image with red shield icon and bold text reading “Fraud Hurts. Reporting Prevents.”—part of an initiative to help organizations detect fraud through anonymous reporting.

How to Detect Fraud in Organizations

Learning about how to detect fraud in organizations empowers leaders to act before problems escalate. Whether you lead a nonprofit, small business, or corporate team, understanding fraud helps you recognize warning signs and respond quickly. By setting up internal controls and anonymous reporting channels, you take direct steps to reduce losses and strengthen your culture of accountability.

The Association of Certified Fraud Examiners (ACFE) offers in-depth global insights in its Report to the Nations. Based on real-world cases from across industries and countries, the 2024 report revealed:

Fraud is Common and Costly

  • Organizations lose about 5% of their revenue to fraud.
  • The total loss across the 1,921 cases studied was over $3.1 billion.
  • A typical fraud scheme lasts 12 months before being caught.
  • The median loss per case was $145,000

Tips Are the Best Way to Detect Fraud

  • 43% of cases were found through tips.
  • Over half of those tips cam from insiders like employees and vendors.
  • Organizations with hotlines reported lower fraud losses and faster detection times.

Not All Fraud Involves Financial Statements

  • Asset misappropriation made up 89% of all cases, with median loss of $120,000.
  • Financial statement fraud schemes, though less common, had a much higher median loss—$766,000.

Proactive Measures Work

  • Organizations with strong internal controls lost 50% less than those without.
  • Key controls include hotlines, anti-fraud training, written policies, and surprise audit

Infographic showing how to detect fraud in organizations, including statistics on median loss, detection time, tip reporting, and hotline effectiveness.

Why Anonymous Reporting Matters

Detecting fraud in organizations goes beyond just financial loss. A strong reporting system can uncover:

  • Conflicts of interest
  • Harassment and retaliation
  • Unethical behavior
  • Policy violations
  • Unfair labor practices

Our confidential third-party hotline allows employees, volunteers, and board members to report issues safely. Anonymous reports give leadership a chance to respond before small problems grow.

Looking for more tools on how to detect fraud in organizations?

Visit our Fraud Prevention Resources or download the Internal Fraud Prevention Checklists for Nonprofits (PDF) and Businesses (PDF).

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