Although the US economy appears to have been in a steady decline for some time, it would seem that financial fraud and abuse are, unfortunately, "growth sectors."
In 1996, the Association of Certified Fraud Examiners (ACFE) published its Report to the Nation (available on the ACFE Web site, www.cfenet.com/ home.asp), believed to be the most comprehensive research and analysis ever conducted on the subject of fraud and abuse. The report estimates that fraud and abuse cost organizations over $400 billion annually. The same study estimated that organizations lose an average of six percent of their total revenues to fraud and abuse. During any phase of the economic cycle, that six percent represents a serious problem for an organization, but in the current environment, vigilant fraud and abuse prevention is even more imperative. The issues for people not specifically trained as professional fraud investigators are straightforward: Why should you care about fraud and abuse? As a lay person, what practical steps can you take to detect and prevent fraud in your building?"
The answer is that many of us have multiple roles in our lives. As both industry professionals and board members, many of us share an interest in ensuring the safety of our Common Interest Realty Associations (CIRAs), giving this topic broad applicability. As industry professionals, we can apply this information to help safeguard other organizations in which we volunteer, and as board members, we can use this information to benefit our homes and neighbors.
Where Fraud Breeds
Fraud and abuse are crimes, and they occur because someone has a financial need–or incentive–to perpetrate them. Organizations that provide an environment "friendly" to a sufficiently motivated or needful person often find themselves victimized. There are three main categories that, separately or in combination, enable fraud and abuse: