The Fraud Landscape in 2021 and Beyond
By Michael J. Raymond
VALUATION, FORENSIC ACCOUNTING & LITIGATION SUPPORT
The Covid-19 pandemic has affected the level of fraud and how organizations are tackling it. The Association of Certified Fraud Examiners (“ACFE”) in its report, The Next Normal: Preparing for a Post-Pandemic Fraud Landscape, found that 51% of organizations polled have uncovered more fraud since the pandemic began. It also found that 71% of organizations expect the level of fraud impacting their organizations to increase over the next year.
Cyberfraud (e.g., business email compromise, hacking, ransomware, and malware) and social engineering (e.g., phishing, brandjacking, and baiting) are the categories most expected to increase, with more than 80% of respondents anticipating growth in these two risk areas. Other risks projected to see large increases include identity crime (e.g., identity theft, synthetic identity schemes, and account takeovers), unemployment fraud, and payment fraud (e.g., credit card fraud and fraudulent mobile payments).
Additional trends relating to Covid-19 include:
- 38% of organizations increased their budgets for anti-fraud technology, making this the most common area for increased investment.
- Shifts in business operations and changing consumer behavior remain the top two fraud risk factors.
- Top challenges facing anti-fraud programs include changes to investigative processes and changes to the control/operating environment.
- More than 80% of organizations have already implemented one or more changes to their anti-fraud programs in response to the pandemic, with updating or conducting internal fraud awareness training (46%) and updating or conducting a fraud risk assessment (43%) being the two most common initiatives.
More than half of respondents believe that enhanced fraud risk awareness and increased collaboration across the organization are necessary to be more effective post-pandemic.
The post-pandemic fraud landscape will continue to develop and change and organizations must consider how this will affect their organizations and the risk of fraud.
The source of information for this article is the Association of Certified Fraud Examiners (ACFE) 2020 Report to the Nations on Occupational Fraud and Abuse
About the Author:
Michelle Muir is a Senior Manager with BST & Co, CPAs in the Valuation, Forensic Accounting & Litigation practice. She helps clients with their fraud and forensic accounting needs, with a particular focus on corruption, asset misappropriation, embezzlement, financial statement fraud, white-collar crime, and accountants’ liability. She also helps clients proactively manage the risk of fraud and misconduct through fraud risk assessments and review of anti-fraud controls. Michelle has over 20 years of experience investigating fraud. Her background includes forensic accounting and audit work at one of the “Big Four” accounting firms as well as in-house forensic accounting work at NYC and Capital Region law firms. Along with her Certified Public Accountant designation, she is also Certified in Financial Forensics and is a Chartered Accountant.
If you have any questions or need assistance with any fraud-related matters, contact Michelle at BST.