Fraud expected to increase at US public companies over the next two years

At least someone’s hitting their targets reliably: fraudsters.

Public companies lost just over 1% of revenue to fraud in 2023 and 2024, the Association of Certified Fraud Examiners estimates, based on a recent survey. Two-thirds of ACFE members who responded said they expected fraud to get worse in the coming years.

The 396 survey respondents included internal fraud investigators and auditors; people with governance responsibilities like board and audit committee members; and third parties including consultants and external auditors.

While the ACFE found that companies lost a little over 1% to fraud, the median estimate respondents gave for those losses was 2.5%, suggesting it’s possible that some fraud was still undetected. Employees estimated revenue losses of 3%, higher than respondents with governance responsibility (2%), suggesting staff feel there’s more fraud taking place than executives do, or that other companies’ fraud losses are higher than their own.

Employees, people in governance roles, and external parties have very different views on what factors lead to fraud. Respondents in governance felt the biggest contributing factor was the quality of external audits, while employees ranked that lowest on a list of 10 factors.

However, all respondents named economic conditions among the top five factors contributing to fraud. So, good thing there’s not a recession or anything coming, right?

Respondents saw cyberfraud as “both the most likely and most significant fraud risk.” They deemed customer payment and vendor fraud as more likely than internal fraud around financial statements, bribery and corruption, or embezzlement.

More than seven in 10 respondents believed the current fraud level in US public companies is medium or high. When asked to evaluate the past and the future, 48% thought fraud had increased slightly in the past two years, and 66% thought it would continue to increase over the next two years.