SUBMITTED BY Tom Fischer

What if we told you that it was likely that your company was losing money due to AP fraud?

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The Association of Certified Fraud Examiners’ (ACFE) 2020 Global Fraud Study identifies three types of fraud as the primary categories of reported fraud cases.

  • Corruption - includes offenses such as bribery, conflicts of interest, and extortion
  • Asset misappropriation - involves an employee stealing or misusing the employing organization’s resources
  • Financial statement schemes - perpetrator intentionally causes a material misstatement or omission in the organization’s financial statements

These fraud cases are costing companies significant amounts of money. According to the CFEs included in the ACFE’s 2020 study, the total losses from AP fraud exceeded $3.6 billion! They estimated that a typical organization loses 5% of revenues in a given year as a result of fraud. Let me state that again...5%! Asset misappropriation was by far the most common form of occupational fraud, occurring in more than 86% of cases, but causing the smallest median loss of $100,000. Financial statement fraud was on the other end of the spectrum, occurring in less than 10% of cases but causing a median loss of $954,000.


Types of Fraud How Often Included in Fraud Cases Median Loss
Corruption 43% $200,000
Asset Misappropriation 86% $100,000
Financial Statement Schemes 10% $954,000
 

When fraud was uncovered through active detection methods, such as automated AP monitoring or account reconciliation, the median loss and median duration of the schemes were lower than when the schemes were detected through passive methods, such as notification by police or by accidental discovery. In fact, ACFE found that having just a few anti-fraud controls in place could save a company hundreds of thousands of dollars in terms of median fraud loss.

For example:

  • Management certification of financial statements saves on average $100,000 in losses compared to the median $200,000 loss when this control is not in place (a 50% reduction)
  • An external audit of internal controls over financial reporting saves on average $100,000 in losses (50% reduction)
  • Management review of financial reporting saves on average $100,000 in losses (50% reduction in losses)
  • An external audit of financial statements saves on average $94,000 (46% reduction in losses)
  • Proactive data monitoring/analysis saves on average $50,000 in losses compared to the median fraud loss $150,000 when no data monitoring/analysis is conducted (a 33% reduction in losses)

Now what if we told you that there was a simple way to implement anti-fraud controls quickly and in a way that does not disrupt your AP workflow or your supply chain?

AP automation, featuring Artificial Intelligence, analytics capabilities, and enhanced visibility and financial monitoring, can potentially save your company hundreds of thousands of dollars in fraud loss. Management can have constant access to AP insights and get daily snapshots of the company’s AP health. All financial documents that require review by management are stored centrally, where they can access them and provide certification. Internal audits can become a regular occurrence, with updated financial data readily available at all times. Collecting all the necessary documents and data for external audits (even when your team is working remotely) becomes easy with automated systems and cloud storage of all your company’s current and historical financial information. And, as we’ve mentioned before, transitioning to AP automation can be quick and easy with the right service provider. You could have all of these anti-fraud controls in place in days, not weeks or months.

If you're ready to start saving your company money today, contact us!
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