According to a report released in September by the Association of Certified Fraud Examiners (ACFE), experts have noticed a rise in fraud this year due in large part to the COVID-19 pandemic. Professionals are seeing fraud increases in nearly every category. The largest growth was in insurance, loan and bank, financial statement, identity theft, and employee embezzlement.
“What we’re finding is that the uptick in fraud that our members are seeing is continuing. Seventy-seven percent of our respondents said they’ve seen fraud go up since COVID-19 came on the scene earlier this year, and they’re expecting that to keep going,” said the director of research at ACFE, Andi McNeal. “Ninety-two percent expect they’re going to see even more fraud over the next twelve months. As we talk about the wake of COVID-19, we’re not just talking about the near future. We’re looking at over the next year. At least in terms of fraud risk, this is going to continue to have an impact.”
The report covered twelve different categories of fraud. It identified those risk areas that affected all organizations as well as those that were more specific to certain industries or parties. An area it did not cover specifically was the Paycheck Protection Program (PPP). PPP loans are supposed to help small businesses survive the economic downturn from COVID-19. They are forgivable loans provided by the Small Business Administration. These types of loans appear to have attracted fraudsters as well.
According to the Assistant Attorney General, Brian Rabbitt, the Justice Department’s Criminal Division has charged fifty-seven defendants with PPP-related fraud and has identified nearly five hundred people suspected of COVID-related loan fraud.
One way to prevent your company from committing fraud, accidentally or otherwise, is to hire an accountant or an accounting firm. An accountant performs financial functions related to the collection, accuracy, recording, analysis, and presentation of financial operations. Accountants can help companies avoid fraud and do things ethically even when managers are tempted to cut corners during the COVID-19 pandemic.