Uncovering Internal Deception: Fast-Tracking Occupational Fraud Investigations with Verified Financial Intelligence

Occupational fraud costs businesses enormous sums, but many firms overlook these threats until losses become too significant to ignore. As the most widespread and damaging form of financial crime, its impact often lingers for years. However, with modern tools like Verified Financial Intelligence (VFI), forensic accountants can make fraud investigations faster and less resource-intensive, offering businesses an efficient way to mitigate potential risks and losses.

According to Tod McDonald, CPA, CIRA, and co-founder of Valid8, forensic accountants and businesses face challenges due to financial and staffing constraints, which leave countless fraud cases unaddressed. This often allows fraud schemes to persist for long periods, making recovery more difficult.

VFI offers a new approach. By using advanced financial intelligence tools, forensic teams can reduce the time and effort involved in investigations, enabling firms to address more cases while optimizing the resources they invest.

The Scope of Occupational Fraud

Occupational fraud is a global issue, with organizations losing approximately 5% of their revenue annually to fraudulent schemes, according to the Association of Certified Fraud Examiners (ACFE) Occupational Fraud 2024: Report to the Nations®. This equates to $5 trillion in global losses each year. While median losses per scheme hover around $145,000, these figures can balloon when fraud schemes are not detected quickly.

Specific schemes, such as billing fraud, payroll manipulation, and check tampering, often last for 18 months or more, allowing losses to grow exponentially:

• Less than 6 months: Losses average $30,000
• 13-18 months: $200,000
• 37-48 months: $650,000

Asset misappropriation, while the most common form of occupational fraud, is less costly compared to rarer but more damaging schemes like financial statement fraud. Leveraging VFI tools in investigations helps firms reduce the burden on their teams and manage complex cases more effectively.

The Human Impact of Fraud

Forensic accountants deal with more than just financial records—they handle the emotional toll of fraud as well. Fraud typically involves trusted individuals within a company, creating a deep sense of betrayal for business leaders.

Tiffany Couch, Principal at Acuity Forensics, author of The Thief in Your Company and a Valid8 customer, notes the emotional strain it causes. Business owners often feel a mix of embarrassment and shock when someone they trusted takes advantage of that trust. Forensic accountants can help alleviate this burden by speeding up the investigative process, providing business owners with a clearer path to resolution.

Why Does Fraud Continue So Long?

Fraud schemes often last for extended periods because they are difficult to detect early, and organizations frequently lack the resources to begin an investigation. Business leaders may ask, "How did I miss this?" but the reality is that fraud can go unnoticed for many reasons:

• Lack of Internal Controls: Many companies do not have sufficient internal controls to identify suspicious activity early on. According to the ACFE, over half of fraud cases occur due to weak or overridden internal controls.
• Overconfidence in Employees: Business leaders often trust their staff implicitly, leading them to ignore small red flags. When fraud is perpetrated by someone in a position of trust, leaders may rationalize the behavior until the evidence becomes too severe to overlook.
• Cumbersome Investigations: Investigating fraud is often seen as too costly and time-consuming. Manual data preparation and analysis can take weeks, and smaller organizations may not have the financial means to hire forensic accountants early enough to prevent further losses.

Balancing the Costs and Benefits of Investigations

Businesses often face a tough decision when deciding whether to launch a fraud investigation. With no guarantee of conclusive evidence, and the high cost of investigating early suspicions, many leaders opt to delay action until they’re certain. This hesitation allows fraud to continue longer, compounding losses and making recovery more challenging.

Verified Financial Intelligence: Streamlining Investigations

Fraud investigations don’t have to be expensive or overly complex. Verified Financial Intelligence (VFI) offers forensic accountants the tools to significantly reduce the time spent on data preparation, allowing teams to focus on higher-value activities.

Instead of spending weeks manually reviewing transactions, forensic teams can upload financial documents to a VFI platform, which then automates the categorization, verification, and reconciliation of data. This automation cuts down investigation time from weeks to days, providing quicker insights for business leaders.

A Smarter Approach to Occupational Fraud Investigations

In a world where occupational fraud can linger for years, modern technology like VFI helps forensic accountants work faster, more efficiently, and with fewer resources. While VFI does not detect or uncover fraud, it accelerates the investigative process, allowing firms to handle cases with greater confidence and speed.

By adopting VFI, forensic accountants can expand their capacity, reduce costs for their clients, and help businesses protect themselves from long-term financial harm.

If you're interested in learning more, read our full ebook on the topic. If you’d like to know how Valid8 and its VFI platform can enhance your fraud investigations, contact us directly.