2016 CANADIAN EDITION REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
2016 CANADIAN EDITION
REPORT TO THE NATIONS O N O C C U P AT I O N A L F R A U D A N D A B U S E
2 REPORT TO THE NATIONS: CANADIAN EDITION
ContentsIntroduction .............................................................................................................3
How Occupational Fraud Is Committed ........................................................................4Frequency and Median Loss of Occupational Fraud Schemes ........................................................................... 4
Detection of Fraud Schemes ..................................................................................7Initial Detection of Occupational Frauds .............................................................................................................. 7
Impact of Hotlines ................................................................................................................................................ 8
Victim Organizations ...............................................................................................9Type of Organization ............................................................................................................................................ 9
Size of Organization ........................................................................................................................................... 10
Industry of Organization ..................................................................................................................................... 11
Anti-Fraud Controls at the Victim Organization ................................................................................................. 12Effectiveness of Controls ............................................................................................................................... 13Internal Control Weaknesses That Contributed to Fraud ........................................................................................ 15
Perpetrators ...........................................................................................................16Perpetrator’s Position ......................................................................................................................................... 17
Perpetrator’s Department .................................................................................................................................. 18
Perpetrator’s Gender .......................................................................................................................................... 19
Perpetrator’s Criminal and Employment History ............................................................................................... 20Perpetrator’s Criminal Background ................................................................................................................ 20Perpetrator’s Employment History ................................................................................................................. 21
Behavioral Red Flags Displayed by Perpetrators ............................................................................................... 22
Case Results ..........................................................................................................23Criminal Prosecutions and Civil Suits ................................................................................................................ 23
Recovery of Losses ............................................................................................................................................ 24
Action Taken Against Perpetrator ....................................................................................................................... 25
Methodology .........................................................................................................26Analysis Methodology ....................................................................................................................................... 26
About the ACFE .....................................................................................................27
REPORT TO THE NATIONS: CANADIAN EDITION 3
Introduction
Fraud is a global issue, but it also can present unique
problems in different regions. While the ACFE’s 2016
Report to the Nations on Occupational Fraud and Abuse
contains several regional comparisons, we wanted to
provide a more robust analysis of occupational fraud
trends in these areas. Consequently, we present this
regional report that provides a closer view of the Canadian
cases in our study.
For this report, we looked at 86 cases of occupational
fraud against victim organizations in Canada, occurring
between January 2014 and October 2015. Many of our
analyses involve median loss amounts, which respondents
reported in U.S. dollars (USD).
This report contains information on the specific fraud
schemes, victim organizations’ demographics and controls,
detection techniques, fraud perpetrators, and case results.1
Our hope is that readers will use this and our other regional
reports to help tailor fraud prevention and investigation
strategies to the risks in their respective regions.
1 For a glossary of terms used in this report, please see page 90 of the 2016 Report to the Nations on Occupational Fraud and Abuse.
4 REPORT TO THE NATIONS: CANADIAN EDITION
How Occupational Fraud Is Committed
Frequency and Median Loss of Occupational Fraud Schemes Occupational fraud schemes can be broken down into
three primary categories: asset misappropriation,
corruption, and financial statement fraud. Of these, asset
misappropriation schemes were by far the most common
form of occupational frauds among the cases in Canada,
which is consistent with both our previous findings
and our global data for 2016. Nearly 90% of Canadian
cases involved the misappropriation of organizational
assets; however, these schemes also caused the smallest
median loss of the three categories, at USD 173,000 per
scheme. In contrast, financial statement frauds were the
costliest type of occupational fraud, with a median loss
of USD 500,000, but were the least common, occurring in
fewer than 13% of cases. Corruption schemes fell in the
middle in both measures, at 26.7% of cases and with a
median loss of USD 250,000.
REPORT TO THE NATIONS: CANADIAN EDITION 5
How Occupational Fraud Is Committed
Figure 1: Occupational Frauds by Category—Frequency
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
FinancialStatement Fraud
Corruption
AssetMisappropriation
TY
PE
OF
FR
AU
D
P E R C E N T O F C A S E S
89.5%
26.7%
12.8%
Figure 2: Occupational Frauds by Category—Median Loss
$0 $200,000 $400,000 $600,000
Financial Statement Fraud
Corruption
Asset Misappropriation
TY
PE
OF
FR
AU
D
M E D I A N L O S S
$173,000
$250,000
$500,000
median duration for All Canadian Cases
24 months
median loss for All Canadian Cases
USD 154,000
6 REPORT TO THE NATIONS: CANADIAN EDITION
How Occupational Fraud Is Committed
To expand the analysis of the types of occupational frauds that affect Canadian organizations, we further broke down
the asset misappropriation cases into nine sub-categories; Figure 3 illustrates the frequency of these fraud schemes
along with the other two primary categories (corruption and financial statement fraud) for comparison purposes. More
than 29% of cases involved billing schemes, making this the most common scheme type perpetrated by the Canadian
fraudsters in our study.
Figure 3: Frequency of Fraud Schemes
0% 5% 10% 15% 20% 25% 30% 35%
Register Disbursements
Payroll
Cash Larceny
Skimming
Check Tampering
Cash on Hand
Financial Statement Fraud
Non-Cash
Expense Reimbursements
Corruption
Billing
SC
HE
ME
TY
PE
P E R C E N T O F C A S E S
29.1%
26.7%
17.4%
16.3%
12.8%
11.6%
11.6%
11.6%
10.5%
10.5%
5.8%
Concealment of Fraud SchemesIn addition to gathering information about how the frauds were perpetrated, we also asked survey respondents how the perpetrators attempted to conceal their schemes. While the sample size of cases from Canada in which concealment methods were provided was quite small, illustrated below are the four most common methods used by the perpetrators in our study.
Altered Physical Documents
Destroyed Physical Documents
Created Fraudulent Transactions in the Accounting System
Created Fraudulent Physical Documents
REPORT TO THE NATIONS: CANADIAN EDITION 7
Initial Detection of Occupational FraudsWe asked respondents to identify how the occupational
fraud schemes were initially detected, and the results are
shown in Figure 4. The most common detection method
among Canadian cases was tips (32.6%), followed by
management review (20.9%) and internal audit (16.3%).
These were also the three most common methods of detec-
tion in our global study.
Detection of Fraud Schemes
Figure 4: Initial Detection of Occupational Frauds
0% 5% 10% 15% 20% 25% 30% 35%
Confession
IT Controls
Notified by Law Enforcement
External Audit
Document Examination
Account Reconciliation
By Accident
Other
Internal Audit
Management Review
Tip
DE
TE
CT
ION
ME
TH
OD
P E R C E N T O F C A S E S
32.6%
20.9%
9.3%
7.0%
3.5%
3.5%
2.3%
2.3%
1.2%
1.2%
16.3%
8 REPORT TO THE NATIONS: CANADIAN EDITION
Detection of Fraud Schemes
Impact of HotlinesWe also analyzed how the presence of a reporting hotline affected the method by which fraud was initially detected;
the results of this analysis are shown in Figure 5. While we generally expect the presence of a reporting mechanism to
increase the likelihood of detection by tip, the contrast between organizations with and without hotlines was stark. Half
of the fraud cases in Canada at organizations with a hotline were detected by a tip, compared to only 13.2% of cases at
organizations without a hotline in place. Management review and internal audit were the top two detection methods at
organizations without hotlines.
Figure 5: Impact of Hotlines on the Top Six Detection Methods
0% 10% 20% 30% 40% 50% 60%
Document Examination
Other
By Accident
Management Review
Internal Audit
Tip
DE
TE
CT
ION
ME
TH
OD
P E R C E N T O F C A S E S
50.0%
14.3%
14.3%
7.1%
7.1%
4.8%
13.2%
21.1%
31.6%
10.5%
5.3%
Organizations With Hotlines
Organizations Without Hotlines2.6%
Top Three Sources of TipsUnderstanding where tips of fraudulent conduct tend to originate helps organizations tailor their anti-fraud reporting and training pro-grams to be more effective. In cases that were detected by tip, we asked survey respondents to identify the source. The infographic below shows the top three sources in Canada, which include employees (42.9%), customers (17.1%), and vendors (11.4%). While reporting hotlines are commonly designed for employees, this data shows that a significant number of tips come from other parties, something that we also found in our global study. This indicates that in order to maximize the effectiveness of anti-fraud hotlines, organizations should consider promoting those hotlines to external parties such as customers and vendors.
EMPLOYEE43%
CUSTOMER17%
VENDOR11%
REPORT TO THE NATIONS: CANADIAN EDITION 9
Victim Organizations
As part of our survey, we asked respondents to provide
information about the organization that was victimized by
the fraud scheme, including the entity’s type, size, and
industry, as well as the mechanisms the organization had
in place to help prevent and detect fraud.
Type of OrganizationFigure 6 depicts both the median loss and percent of cases
based on the type of organization that was victimized.
Privately held companies and government agencies com-
bined represented more than half of the cases reported to us.
These organizations also suffered the highest median losses
per case, at USD 300,000 and USD 148,000, respectively.
Figure 6: Type of Victim Organization—Frequency and Median Loss
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Other*Not-for-Profit*Public CompanyGovernmentPrivate Company0%
5%
10%
15%
20%
25%
30%
35%
40%
T Y P E O F V I C T I M O R G A N I Z AT I O N
ME
DIA
N L
OS
SP
ER
CE
NT
OF
CA
SE
S
Percent of CasesMedian Loss
$300,000
$148,000
$125,000
37.2%
25.6%24.4%
7.0%5.8%
*Not-for-Profit and Other categories had insufficient responses for median loss calculation.
10 REPORT TO THE NATIONS: CANADIAN EDITION
Victim Organizations
Size of OrganizationSmall organizations (defined as those with fewer than 100 employees for purposes of this report) were the most common
victims in our study, representing approximately 30% of Canadian cases reported to us. Small businesses also suffered
the greatest median loss of USD 300,000 per case—nearly three times the median loss experienced by the largest
victim organizations (USD 110,000). Compounding this disparity is that small businesses would likely feel the impact of
such a loss much more than larger organizations would.
Figure 7: Size of Victim Organization—Frequency and Median Loss
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
10,000+1,000–9,999100–999<100
N U M B E R O F E M P L O Y E E S
ME
DIA
N L
OS
SP
ER
CE
NT
OF
CA
SE
S
Percent of CasesMedian Loss
$300,000
$180,000
$86,000
0%
5%
10%
15%
20%
25%
30%
35%
30.1%
15.7%
28.9%
25.3%
$110,000
REPORT TO THE NATIONS: CANADIAN EDITION 11
Victim Organizations
Industry of OrganizationFigure 8 categorizes the cases reported to us by industry of the victim organization. Banking and financial services,
government and public administration, and health care were the most represented sectors in the fraud cases we
examined. However, while this data shows the distribution of cases from our survey, it does not necessarily suggest
that certain industries are more at risk of fraud than others. Our data was collected through a survey of Certified Fraud
Examiners (CFEs), so this distribution primarily reflects the industries for which CFEs typically provide services.
Figure 8: Industry of Victim Organization
0% 2% 4% 6% 8% 10% 12% 14% 16%Services (Professional)
Utilities
Agriculture, Forestry, Fishing, and Hunting
Arts, Entertainment, and Recreation
Other
Real Estate
Services (Other)
Technology
Telecommunications
Wholesale Trade
Mining
Oil and Gas
Education
Transportation and Warehousing
Insurance
Manufacturing
Retail
Construction
Health Care
Government and Public Administration
Banking and Financial Services
IND
US
TR
Y
P E R C E N T O F C A S E S
15.1%
14.0%
9.3%
7.0%
5.8%
5.8%
5.8%
4.7%
4.7%
3.5%
3.5%
2.3%
2.3%
2.3%
2.3%
2.3%
2.3%
2.3%
2.3%
1.2%
1.2%
12 REPORT TO THE NATIONS: CANADIAN EDITION
Victim Organizations
Anti-Fraud Controls at the Victim OrganizationWe asked survey respondents which, if any, of several anti-fraud controls were in place at the victim organization at the
time the fraud occurred. External audits of the organization’s financial statements were the most commonly implemented
control. As reflected in Figure 9, 83.3% of Canadian victim organizations in our study had their financial statements audited
by an independent auditor. Other common controls among these organizations were management certification of the
financial statements and a formal code of conduct. Interestingly, employee support programs were much more common
among organizations in Canada than in any other region in our global study. This initiative can help address pressures
that employees face, which—when combined with opportunity and rationalization—often lead to occupational fraud.
Figure 9: Frequency of Anti-Fraud Controls
0% 20% 40% 60% 80% 100%Rewards for Whistleblowers
Job Rotation/Mandatory Vacation
Surprise Audits
Fraud Training for Managers/Executives
Formal Fraud Risk Assessments
Proactive Data Monitoring/Analysis
Fraud Training for Employees
Dedicated Fraud Department, Function, or Team
Anti-Fraud Policy
Hotline
Independent Audit Committee
Management Review
Internal Audit Department
External Audit of ICOFR
Employee Support Programs
Code of Conduct
Management Certification of F/S
External Audit of F/S
AN
TI-
FR
AU
D C
ON
TR
OL
P E R C E N T O F C A S E S
79.7%
79.2%
83.3%
77.0%
65.8%
64.7%
61.5%
59.2%
52.5%
39.0%
38.6%
38.0%
37.2%
35.5%
35.4%
31.1%
16.2%
8.0%
Key:
External Audit of F/S = Independent External Audits of the Organization’s Financial Statements
Management Certification of F/S = Management Certification of the Organization’s Financial Statements
External Audit of ICOFR = Independent External Audits of the Organization’s Internal Controls Over Financial Reporting
REPORT TO THE NATIONS: CANADIAN EDITION 13
Victim Organizations
Effectiveness of ControlsTo explore the effectiveness of various anti-fraud controls, we compared cases where a certain control had been in
place at the time of fraud versus cases where the control was missing. We then measured the size of the loss and the
duration of the fraud in each group. As shown in Figure 10, the presence of each control was associated with a lower
median loss. Similarly, all but two controls corresponded with quicker fraud detection (see Figure 11).
Figure 10: Median Loss Based on Presence of Anti-Fraud Controls*
Control Percent of Cases Control in Place Control Not in Place Percent Reduction
Job Rotation/Mandatory Vacation 16.2% $16,000 $250,000 93.6%
External Audit of Financial Statements 83.3% $135,000 $750,000 82.0%
Internal Audit Department 64.7% $112,000 $396,000 71.7%
Surprise Audits 31.1% $80,000 $250,000 68.0%
Formal Fraud Risk Assessments 35.5% $80,000 $250,000 68.0%
Employee Support Programs 77.0% $125,000 $350,000 64.3%
Anti-Fraud Policy 39.0% $98,000 $250,000 60.8%
Hotline 52.5% $111,000 $250,000 55.6%
External Audit of Internal Controls over Financial Reporting 65.8% $111,000 $250,000 55.6%
Dedicated Fraud Department, Function, or Team 38.6% $118,000 $250,000 52.8%
Independent Audit Committee 59.2% $125,000 $250,000 50.0%
Management Review 61.5% $138,000 $250,000 44.8%
Proactive Data Monitoring/Analysis 37.2% $112,000 $200,000 44.0%
Fraud Training for Employees 38.0% $118,000 $200,000 41.0%
Fraud Training for Managers/Executives 35.4% $128,000 $175,000 26.9%
Code of Conduct 79.2% $150,000 $188,000 20.2%
Management Certification of Financial Statements 79.7% $150,000 $175,000 14.3%
*Rewards for Whistleblowers was omitted from this table due to insufficient responses for median loss calculation.
14 REPORT TO THE NATIONS: CANADIAN EDITION
Victim Organizations
Figure 11: Median Duration of Fraud Based on Presence of Anti-Fraud Controls*
Control Percent of Cases Control in Place Control Not in Place Percent Reduction
Employee Support Programs 77.0% 13 months 42 months 69.0%
Dedicated Fraud Department, Function, or Team 38.6% 12 months 36 months 66.7%
Internal Audit Department 64.7% 12 months 36 months 66.7%
Independent Audit Committee 59.2% 13 months 36 months 63.9%
External Audit of Internal Controls over Financial Reporting 65.8% 12 months 33 months 63.6%
Hotline 52.5% 12 months 30 months 60.0%
Management Review 61.5% 12 months 24 months 50.0%
Surprise Audits 31.1% 12 months 24 months 50.0%
Formal Fraud Risk Assessments 35.5% 12 months 24 months 50.0%
Fraud Training for Managers/Executives 35.4% 12 months 24 months 50.0%
Anti-Fraud Policy 39.0% 12 months 24 months 50.0%
Fraud Training for Employees 38.0% 12 months 24 months 50.0%
Job Rotation/Mandatory Vacation 16.2% 15 months 24 months 37.5%
Proactive Data Monitoring/Analysis 37.2% 15 months 24 months 37.5%
Management Certification of Financial Statements 79.7% 18 months 24 months 25.0%
Code of Conduct 79.2% 24 months 24 months 0.0%
External Audit of Financial Statements 83.3% 24 months 24 months 0.0%
*Rewards for Whistleblowers was omitted from this table due to insufficient responses for median duration calculation.
REPORT TO THE NATIONS: CANADIAN EDITION 15
Victim Organizations
Internal Control Weaknesses That Contributed to FraudSurvey respondents also provided information about the internal control breakdowns that contributed to the fraud.
A straightforward lack of controls was primarily to blame in more than 30% of Canadian cases, making this the top
contributing factor. In one-quarter of the frauds, existing controls were overridden by the perpetrator, and in nearly 18%
of cases, a lack of managerial oversight allowed the scheme to occur.
Figure 12: Primary Internal Control Weakness Observed by CFE
6.6% 2.9%Lack of Management Review
17.9%Override of Existing Internal Controls25.0%
Lack of Internal Controls 31.0% Poor Tone at the Top
13.1%
Lack of Competent Personnel in Oversight Roles6.0%
Other3.6%
Lack of Independent Checks/Audits3.6%
16 REPORT TO THE NATIONS: CANADIAN EDITION
Perpetrators
We asked survey respondents to provide information about
the fraud perpetrators they investigated, including the
fraudster’s level of authority, the department where he or
she worked, the perpetrator’s gender, and the behavioral
signs that the fraudster had exhibited prior to or
during commission of the fraud.2
2 In cases where more than one perpetrator was involved, the data on perpetrators relates to the principal perpetrator, which we defined as the person who worked for the victim organiza-tion and who was the primary culprit.
REPORT TO THE NATIONS: CANADIAN EDITION 17
Perpetrators
Perpetrator’s PositionThe fraudster’s level of authority within an organization was strongly correlated with the size of the fraud, as shown in
Figure 13. Only 19.5% of occupational frauds in our Canadian dataset were committed by owner/executives, but these
cases resulted in a median loss of USD 835,000, which was significantly higher than the losses caused by employees
or managers. This result was consistent with our global data and with prior studies; high-level fraudsters tend to have
greater ability to override internal controls and greater access to organizational resources and thus typically cause
greater financial damage when they commit fraud.
Figure 13: Position of Perpetrator—Frequency and Median Loss
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Other*Owner/ExecutiveManagerEmployee
ME
DIA
N L
OS
SP
ER
CE
NT
OF
CA
SE
S
Percent of CasesMedian Loss
$110,000
$175,000
$835,000
30.1%
15.7%
45.1%
30.5%
19.5%
4.9%
P O S I T I O N O F P E R P E T R AT O R
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
*Other category had insufficient responses for median loss calculation.
18 REPORT TO THE NATIONS: CANADIAN EDITION
Perpetrators
Perpetrator’s DepartmentFigure 14 shows the departments where Canadian fraudsters worked within their organizations. The most common source
of occupational fraud was the sales department, which was identified in more than one-fifth of our Canadian cases. The
sales department was followed by operations, accounting, executive/upper management, and customer service, each of
which was identified in more than 10% of all cases. These were also the five departments most commonly associated
with occupational fraud in our global report.
Figure 14: Department of Perpetrator—Frequency
0% 5% 10% 15% 20% 25%
Human Resources
Information Technology
Internal Audit
Manufacturing and Production
Marketing/Public Relations
Other
Finance
Legal
Warehousing/Inventory
Purchasing
Customer Service
Executive/Upper Management
Accounting
Operations
Sales
DE
PA
RT
ME
NT
OF
PE
RP
ET
RA
TO
R
P E R C E N T O F C A S E S
14.6%
11.0%
11.0%
4.9%
3.7%
3.7%
3.7%
2.4%
2.4%
2.4%
1.2%
1.2%
1.2%
20.7%
15.9%
REPORT TO THE NATIONS: CANADIAN EDITION 19
Perpetrators
Perpetrator’s GenderApproximately 65% of occupational frauds in our Canadian cases were committed by males, as shown in Figure 15.
While the disparity between male and female fraudsters in Canada was large, it was actually lower than in most other
regions. We found in our global study that males were responsible for 69% of occupational frauds worldwide, and Canada
had the second-lowest rate of male fraudsters among the nine regions we examined.
Figure 15: Gender of Perpetrator—Frequency
Male 64.6%
Female35.4%
Losses caused by male fraudsters were significantly higher than those caused by females (see Figure 16). The disparity
in median loss based on gender has been consistent since we began tracking this data in 1996.
Figure 16: Gender of Perpetrator—Median Loss
$0 $50,000 $100,000 $150,000 $200,000
Female
Male
GE
ND
ER
OF
PE
RP
ET
RA
TO
R
M E D I A N L O S S
$85,000
$180,000
20 REPORT TO THE NATIONS: CANADIAN EDITION
Perpetrators
Perpetrator’s Criminal and Employment History
Perpetrator’s Criminal BackgroundOnly 4.1% of occupational fraudsters in the Canadian cases in our study had been previously convicted of a fraud-related
offense (see Figure 17). Historically, we have found that very few occupational fraud perpetrators have prior fraud
convictions. It should be noted, though, that in more than 41% of Canadian cases in our study, the fraud was never
reported to law enforcement (see Figure 19 on page 24). This suggests that the number of occupational fraudsters who
are repeat offenders may be higher than the conviction data would indicate.
Figure 17: Criminal Background of Perpetrator
Never Charged or Convicted89.8%
Had Prior Convictions4.1%
Charged but Not Convicted4.1%
Other4.1%
PROFILE OF OCCUPATIONAL FRAUDSTERS IN CANADA
55% 59%
Education: University degree or higher
Tenure: More than 5 years
Collusion: cases with 2 or more perpetrators
39%
MEDIAN LOSS IN COLLUSION CASES WAS 121% HIGHER THAN IN SINGLE-PERPETRATOR SCHEMES.
Median Age: 40
REPORT TO THE NATIONS: CANADIAN EDITION 21
Perpetrators
Perpetrator’s Employment HistoryApproximately 8% of fraud perpetrators had been previously terminated by an employer for fraud-related conduct, and
approximately 8% had previously received some other form of punishment, such as a suspension or reprimand, for
fraud-related activity. This also suggests that the number of occupational fraudsters who are repeat offenders is higher
than prior criminal conviction data would indicate.
Figure 18: Employment Background of Perpetrator
6.6% 2.9%
Never Punished or Terminated78.9%
Previously Punished7.9%
Previously Terminated7.9%
Other10.5%
22 REPORT TO THE NATIONS: CANADIAN EDITION
Perpetrators
Behavioral Red Flags Displayed by Perpetrators
OCCUPATIONAL FRAUD PERPETRATORS OFTEN EXHIBIT CERTAIN BEHAVIORAL CHARACTERISTICS ASSOCIATED WITH THEIR CRIMES. The following behavioral red flags were identified in at least 20% of Canadian fraud cases in our study:
Irritability, Suspiciousness, or Defensiveness
24%56%
Living Beyond Means
financial difficulties
32%
Divorce/Family Problems
Wheeler-Dealer Attitude
21%
Complained About InadequatePay
20% 20%
46% OF CANADIAN OCCUPATIONAL FRAUDSTERS HAD COMMITTED SOME FORM OF NON-FRAUD WORKPLACE VIOLATION DURING OR PRIOR TO THEIR FRAUDS.The most common non-fraud violations were:
31%
Bullying or Intimidation Excessive TardinessExcessive Absenteeism
15% 9%
REPORT TO THE NATIONS: CANADIAN EDITION 23
Case Results
Criminal Prosecutions and Civil SuitsWe asked respondents about the outcome of their fraud
cases, including whether the cases were referred to law
enforcement for criminal prosecution or pursued in civil
court. Figure 19 shows that 58.7% of Canadian cases
were referred to law enforcement, which is very similar
to the criminal prosecution rate in our global study (59.3%).
Conversely, 34.3% of cases in Canada resulted in civil
litigation, which was about 11% higher than the rate of
civil litigation in our global report.
24 REPORT TO THE NATIONS: CANADIAN EDITION
Case Results
Figure 19: Cases Resulting in Referral to Law Enforcement or Civil Suit
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Civil Suit
Referral to Law Enforcement
LE
GA
L A
CT
ION
TA
KE
N
P E R C E N T O F C A S E S
65.7%
No
Yes
58.7% 41.3%
34.3%
Recovery of LossesDetecting and investigating fraud is crucial to mitigate current losses and to serve as a deterrent against future frauds.
However, our study suggests that organizations are rarely made whole through fraud recovery efforts, even when the
perpetrator is identified. In fact, more than 60% of organizations in Canada recovered no losses resulting from the
fraud. Only 7.9% of organizations obtained a full recovery.
Figure 20: Recovery of Victim Organization’s Losses
0% 10% 20% 30% 40% 50% 60% 70%
100%
76–99%
51–75%
26–50%
1–25%
No Recovery
PE
RC
EN
T O
F L
OS
S R
EC
OV
ER
ED
P E R C E N T O F C A S E S
60.3%
7.9%
9.5%
7.9%
6.3%
7.9%
REPORT TO THE NATIONS: CANADIAN EDITION 25
Case Results
Action Taken Against PerpetratorRecovering assets is not the only goal of a fraud examination. It is also important to identify perpetrators at the organization
and take appropriate disciplinary action against them. As shown in Figure 21, approximately 70% of Canadian victim
organizations terminated the perpetrator. Interestingly, the third-most common response among Canadian cases was
for the perpetrator to receive no punishment. In our global report, “no punishment” ranked last among these possible
responses to fraud.
Figure 21: Action Taken Against Perpetrator
0% 10% 20% 30% 40% 50% 60% 70% 80%
Permitted or RequiredResignation
Probation or Suspension
Perpetrator Was No LongerWith Organization
Settlement Agreement
No Punishment
Other
Termination
AC
TIO
N T
AK
EN
AG
AIN
ST
PE
RP
ET
RA
TO
R
P E R C E N T O F C A S E S
3.7%
4.9%
6.2%
7.4%
8.6%
18.5%
70.4%
26 REPORT TO THE NATIONS: CANADIAN EDITION
Methodology
This report is based on the results of the 2015 Global
Fraud Survey, an online survey opened to 41,788 Certified
Fraud Examiners (CFEs) from July 2015 to October 2015.
As part of the survey, respondents were asked to provide
a detailed narrative of the single largest fraud case they
had investigated since January 2014. Additionally, after
completing the survey the first time, respondents were
provided the option to submit information about a second
case that they investigated. Cases submitted were required
to meet the following four criteria:
1. The case must have involved occupational fraud
(defined as internal fraud, or fraud committed by a
person against the organization for which he or she
works).
2. The investigation must have occurred between
January 2014 and the time of survey participation.
3. The investigation must have been complete at the
time of survey participation.
4. The respondent must have been reasonably sure
the perpetrator(s) was (were) identified.
Respondents were then presented with questions regarding
the particular details of the fraud case, including information
about the perpetrator, the victim organization, and the
methods of fraud employed, as well as fraud trends in
general. We received 7,497 total responses to the survey,
2,410 of which were usable for purposes of our global
study. Of these usable responses, 86 involved occupational
fraud cases perpetrated against organizations in Canada;
the data contained in this report is based solely on the
information provided in these 86 responses.
Analysis MethodologyIn calculating the percentages discussed throughout
this report, we used the total number of complete and
relevant responses for the question(s) being analyzed.
Specifically, we excluded any blank responses or instanc-
es where the participant indicated that he or she did not
know the answer to a question. Consequently, the total
number of cases included in each analysis varies. In
addition, several survey questions allowed participants to
select more than one answer. Therefore, the sum of per-
centages in certain figures throughout the report exceeds
100%. Additionally, all charts throughout the report
include only those categories for which we received at
least one response from survey participants.
All loss amounts discussed throughout the report are
calculated using median loss rather than mean, or average,
loss. Additionally, we excluded median loss calculations for
categories for which there were fewer than ten responses.
Because the direct losses caused by financial statement
frauds are typically spread among numerous stakeholders,
obtaining an accurate estimate for this amount is extremely
difficult. Consequently, for schemes involving financial
statement fraud, we asked survey participants to provide
the gross amount of the financial statement misstatement
(over- or under-statement) involved in the scheme. All
losses reported for financial statement frauds throughout
this report are based on those reported amounts.
REPORT TO THE NATIONS: CANADIAN EDITION 27
About the ACFE
Founded in 1988 by Dr. Joseph T. Wells, CFE, CPA, the
ACFE is the world’s largest anti-fraud organization and
premier provider of anti-fraud training and education.
Together with more than 75,000 members in more than
150 countries, the ACFE is reducing business fraud
worldwide and providing the training and resources
needed to fight fraud more effectively.
The ACFE provides educational tools and practical solutions
for anti-fraud professionals through initiatives including:
• Global conferences and seminars led by anti-fraud
experts
• Instructor-led, interactive professional training
• Comprehensive resources for fighting fraud,
including books, self-study courses and articles
• Leading anti-fraud publications, including Fraud
Magazine™, The Fraud Examiner and FraudInfo
• Local networking and support through more than
170 ACFE chapters worldwide
• Anti-fraud curriculum and educational tools for
colleges and universities
The positive effects of anti-fraud training are far-reaching
Clearly, the best way to combat fraud is to educate
anyone engaged in fighting fraud on how to effectively
prevent, detect and investigate it. By educating, uniting
and supporting the global anti-fraud community with the
tools to fight fraud more effectively, the ACFE is reducing
business fraud worldwide and inspiring public confi-
dence in the integrity and objectivity of the profession.
The ACFE offers its members the opportunity for profes-
sional certification. The Certified Fraud Examiner (CFE)
credential is preferred by businesses and government
entities around the world and indicates expertise in fraud
prevention and detection.
MembershipImmediate access to world-class anti-fraud knowledge
and tools is a necessity in the fight against fraud.
Members of the ACFE include accountants, internal audi-
tors, fraud investigators, law enforcement officers, lawyers,
business leaders, risk/compliance professionals and educa-
tors, all of whom have access to expert training, educational
tools and resources. More than 75,000 members from
all over the world have come to depend on the ACFE for
solutions to the challenges they face in their professions.
Whether their career is focused exclusively on preventing
and detecting fraudulent activities or they just want to learn
more about fraud, the ACFE provides the essential tools
and resources necessary for anti-fraud professionals to
accomplish their objectives. To learn more, visit ACFE.com
or call (800) 245-3321 / +1 (512) 478-9000.
Certified Fraud ExaminersCertified Fraud Examiners (CFEs) are anti-fraud experts
who have demonstrated knowledge in four critical areas:
Financial Transactions and Fraud Schemes, Law, Investi-
gation, and Fraud Prevention and Deterrence. In support
of CFEs and the CFE credential, the ACFE:
• Provides bona fide qualifications for CFEs through
administration of the CFE Exam
• Requires CFEs to adhere to a strict code of profes-
sional conduct and ethics
• Serves as the global representative for CFEs to busi-
ness, government and academic institutions
• Provides leadership to inspire public confidence in
the integrity, objectivity and professionalism of CFEs
CERTIFIED FRAUD EXAMINER
© 2016 Association of Certified Fraud Examiners, Inc.
“ACFE,” “CFE,” “Association of Certified Fraud Examiners,” the ACFE Seal, and the ACFE Logo are trademarks owned by the Association of Certified Fraud Examiners, Inc. (“ACFE”) and registered in Canada. These marks, along with “Certified Fraud Examiner,” “Report to the Nations” and other related trademarks, names and logos are the property of the Association of Certified Fraud Examiners, Inc., and are registered and/or used in the U.S. and countries around the world.
GLOBAL HEADQUARTERS • THE GREGOR BUILDING716 West Ave • Austin, TX 78701-2727 • USAPhone: (800) 245-3321 / +1 (512) 478-9000Web: ACFE.com • [email protected]