Economic Crime Journal

Economic Crime Journal

Dr. David Murphy is a Certified Fraud Specialist and Certified Public Accountant and is a member of the Board of Regents of the Association of Certified Fraud Specialists. In addition, he has served as the Senior Anti-corruption Advisor to the Controller General of Peru and the government of Bulgaria. He was also the director of a two-year USAID anti-corruption graduate education project in Bolivia and consulted to the Central Bank of the Philippines in the wake of a major bank fraud in Manila.

Other Posts:

How to Catch Fraudulent Financial Reporting (11/16/2009)
ASIS Economic Crime Council Highlights LC's Program (11/06/2009)
Fraud on Steroids (10/19/2009)
U.S. Banking Fraud Interview (04/27/2009)
Financial Statement Fraud (04/17/2009)
Internet Fraud on the Rise (04/06/2009)
Fraud Close to Home (03/27/2009)
Madoff and Ponzi (03/26/2009)
New Credit Card Scam (05/01/2008)

PricewaterhouseCoopers recently published its 2007 biannual study of fraud. This report covers the period from 2007 through 2008 and follows their 2005 report. The results of the current report were based on interviews with 5,400 companies in 40 countries. I think that the most important conclusion in their report was that it's nearly impossible to get rid of economic crime.

In spite of an increased awareness on the part of the public of white collar crime and fraud the overall incidence of fraud remained constant from their 2005 to 2007 report and was 6 percent higher than in 2003. In addition about half of the surveyed companies reported being victim to fraud with asset misappropriate being the most common. The average direct cost of fraud was reported to be $3.2 million. In addition, over 80 percent of the companies who reported fraud indicated that they had suffered significant collateral damage as well. The collateral damage included damage to the brand, staff morale, external business relations, increased regulatory costs, and damage to their relationship with government regulators. To put that into perspective the average loss in a bank robbery in the United States, as reported by local police departments in their Uniform Crime Reports, is about $4,000. White collar crime is much more lucrative than bank robbery.

Companies don't do a good job in detecting fraud either. Take a look at the fraud detection statistics below:

Obviously businesses do not do a very good job of preventing or detecting fraud. Lynchburg College has an exciting new major in Economic Crime Prevention and Investigation. Be part of the solution to the fraud problem.