The prevalence and risk of internal fraud is a significant cause for concern across industries. The Association of Certified Fraud Examiners (ACFE) 2024 Report to the Nations estimated that organizations lose 5% of revenue to fraud each year. Moreover, the report also found total losses of more than $3.1 billion due to fraud among 1,921 cases from 138 countries.1
These statistics cannot be ignored. Rather, they support the need for organizations to expand their fraud detection strategy to a more future-focused, collective process.
Proactive monitoring tools, such as a third-party hotline platform and data analytics, coupled with employee engagement and a culture of transparency, can help organizations detect fraud in a broader way.
This article will provide organizations with an overview of occupational fraud, how third-party hotline platforms and data analytics can mitigate the impact of fraud cases on organizations, and how whistleblowers play a critical part in fraud detection efforts.
Occupational Fraud & the Fraud Triangle
Before addressing occupational fraud detection, it helps to travel back to basics with the definition of fraud itself. According to the ACFE, “fraud” is any activity that relies on deception in order to achieve a gain.2 Per Black’s Law Dictionary, the activity becomes a crime when it is “a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.”3
There are several reasons and factors that may align for people and drive them to commit these acts. A common illustration of this is outlined in Dr. Donald Cressey’s Fraud Triangle. This theory outlines three elements—financial pressure (or a perceived pressure facing an individual), opportunity (the perceived opportunity to commit fraud), and rationalization (an individual’s justification or lack of integrity for committing the act) that are typically seen in instances of occupational fraud.4
It is important to note that artificial intelligence (AI) has shifted the opportunity and rationalization elements of the fraud triangle. Meaning, AI allows individuals to commit fraud at a faster and more pervasive scale than we have currently seen. In addition, the internet added a degree of separation between fraudsters and the pain they’re inflicting. Having screens and layers between perpetrator and victim makes it easier for fraudsters to rationalize the harm they cause without directly facing the reality of their behavior.
With this in mind, let’s look at occupational fraud.
Occupational fraud is simply internal fraud committed by employees. Examples of this include asset misappropriation, corruption, and financial statement fraud. The ACFE Report estimates that the median loss for an organization due to occupational fraud is $145,0005 and that most fraud schemes last approximately 12 months before detection. To that end, a majority of entities in the ACFE Report recovered nothing after discovering these instances of fraud. Think of the potential economic impact to a business over a year’s duration—depending on the size of the business, this could be a staggering loss.
Still, damage to companies goes beyond financial means. It can also cause reputational harm to a business, loss of public confidence in the company, strained or decreased client and consumer relationships, a negative staff morale, and distraction from the company mission.
Third-Party Hotline Platforms
There is simply too much at stake to remain complacent: this is why detection and reporting methods should be used to ramp up fraud prevention and detection.
The most popular reporting mechanism for fraud is tips through a third-party hotline platform.6 These services establish a safe reporting environment for individuals and may provide anonymity to those sharing tips. These individuals are often referred to as whistleblowers, or people who bring information about fraudulent activities to light. Whistleblowers can be internal (current employees, management, directors/officers) or external (customers, vendors, suppliers, investors, law enforcement, competitors, media, or former employees). They are usually motivated by intrinsic ethics, loyalty, and truth.
Providing a trusted, objective, and anonymous reporting mechanism, such as IntegraReport from Forvis Mazars, can assist companies by helping to increase the likelihood and speed of detecting incidents of fraud, ethical violations, and compliance issues. The ACFE’s research found that organizations with hotlines were nearly twice as likely to detect fraud via tips as an organization without hotlines. This highlights the crucial role that hotlines play in addressing risk and how whistleblowers can help reinforce a culture of transparency at an organization.
Data Analytics for Fraud Detection
Another secret weapon to combating fraud is data analytics. Companies may apply machine learning and algorithmic techniques to their data and monitor for irregular patterns or suspicious activity that could indicate fraud.
These efforts typically focus on structured data—e.g., accounts payable (AP), enterprise resource planning (ERP) systems, payroll, and purchasing cards—and unstructured data, e.g., social media, email, cloud storage, and Microsoft Word files, from employees, vendors, and others.
Data monitoring can be used to perform:
- Vendor scoring (a vendor score assessment of master files and AP tests)
- Duplicate invoice detection (via a payment risk analytics tool)
- Address and name matching
- Geospatial analysis
- Tone and relationship analysis in emails
- Textual analysis in unstructured data (relationship mapping, named entity extraction, predictive coding, topic mapping, digital forensics, and tone detection)
The actions above can help organizations swiftly respond to and mitigate fraudulent behavior by safeguarding assets to maintain operational integrity.7
Forward-Thinking Fraud Prevention
Occupational fraud can be prevented, and it is worth investing in fraud mitigation efforts that can protect organizations, employees, and the clients they serve. Third-party hotline platforms and data analytics tools are excellent resources for fraud detection and risk management.
Employees are the eyes and ears of an organization; it is crucial to be aware of what they know and provide an avenue for them to report. Utilizing a third-party hotline platform provides a completely anonymous and unbiased alternative for employees to alert organizations about potential fraud or unethical behavior. With the right tools in place, organizations can bolster their fraud prevention and protection efforts.
Ready to strengthen your ethical reporting procedures? IntegraReport from Forvis Mazars can help. Our forensics team has extensive knowledge and experience in assisting organizations with hotline implementation. They are ready to address anonymous submissions and whistleblower reports to help you reinforce and maintain a compliant and ethical work environment.
In addition, our data analytics professionals at Forvis Mazars can unlock the power of your data to help you enhance marketing strategies, develop competitive advantages, open up new revenue opportunities, reduce risk, and improve operational efficiency.
If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.
- 1“Occupational Fraud 2024: A Report to the Nations,” legacy.acfe.com, Reporting from January 2022 to September 2023.
- 2“Fraud 101: What Is Fraud,” acfe.com, 2025.
- 3 Ibid.
- 4 Ibid.
- 5“Occupational Fraud 2024: A Report to the Nations,” legacy.acfe.com, Reporting from January 2022 to September 2023.
- 6 Ibid.
- 7“Fraud Detection through Data Analytics: Identifying Anomalies and Patterns,” iabac.org, May 14, 2024.