Employees are your best defense in the fight against fraud

The fraud is coming from inside the house.

Fraud committed by an organization’s employees is “likely the largest and most costly form of financial crime in the world,” according to John Warren, CEO of the Association of Certified Fraud Examiners (ACFE). Occupational fraud costs companies a median $104,000 per incident, and one in five occupational fraud cases result in losses of more than $1 million.

That’s according to the ACFE’s 2026 Report to the Nations. The report examined 2,402 fraud cases worldwide that had been investigated by ACFE members.

In most of those cases, companies won’t get any of the money back. More than half the time (56%) companies weren’t able to recover any of the lost funds, while about a third (29%) received partial returns and 15% recovered all losses.

Though staff are the ones committing occupational fraud, they’re also key to exposing it. In the 30 years ACFE has produced the Report to the Nations, tips have always been the number-one way frauds are first detected. Tips are almost three times as likely to uncover a fraud as the next common detection method—internal audits.

The majority of those tips—55%—come from employees, underscoring the importance of whistleblower hotlines. While the majority of companies (73%) have hotlines, less than a quarter (24%) of small firms, defined by the ACFE as those with fewer than 100 employees, do.

Hotlines can also reduce the severity of frauds. In companies that have hotlines, frauds are investigated more quickly (within an average of 11 months) and result in median losses of $100,000; in companies that lack them, investigations last an average of 17 months and cost companies a median $150,000.

Fraud prevention training can enhance the efficacy of whistleblower hotlines, the ACFE found. The majority (71%) of employee whistleblowers have had training.

The ACFE also found that the most effective fraud controls aren’t always ones that most companies have. Surprise audits result in 50% lower losses and 50% faster detection rates (speed of detection matters, as frauds grow more costly the longer they go uncovered), but only 44% of companies use them. Only around half of companies (49%) use proactive data monitoring, which promotes 53% lower losses and 44% faster detections.

But a relatively straightforward control procedure—management review, used in 71% of companies—is also effective, leading to 55% lower losses and 44% faster detection rates.