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Actually, there may be benefits to be gained from not attempting to rely on governmental sources for the primary, or even significant, levels of funding. Ted Gest, a veteran reporter on law enforcement matters and the politics of Washington, has written of the often erratic and turbulent history of efforts to inject the federal government, and its dollars, into matters of local law enforcement. Tracing this perspective of local crime as a federal issue to the Johnson administration, he recounts how each succeeding administration has brought its own views, priorities, and politics to the issue, often with unintended or disruptive consequences. It may be that in the quest for better solutions to the issues of occupational fraud, this area is just as well left undisturbed.7
Some academic institutions appear to be taking a heightened interest in occupational fraud and some are adding courses on the subject to their academic programs. As has been noted, the arena of occupational fraud may be a particularly rich one academically, since it spans areas such as accounting, law enforcement, social science, mathematics, psychology, sociology, and bioscience. Such actions are welcome, but the history of institutions of higher education is that they are normally looking for sources of funding rather than providing them.
Associations are another potential source of funding, but this may prove inadequate to the substantial needs at hand. While organizations such as the American Association of Retired Persons, the Better Business Bureau, the National Consumers League, and others all have an interest in fraud, it is usually fraud committed by persons against other persons, not occupational fraud. Also, the vast majority of their mission is public awareness and education, rather than research, recordkeeping, and analysis.
The ACFE is by far the largest organization in the world devoted exclusively to fraud, and its mandate easily encompasses the conceptual arena of occupational fraud. The founder and chairperson of the ACFE, Joe Wells, has written a highly successful book of the same name (Occupational Fraud and Abuse, see Chapter 3, note 3). The ACFE also has an extensive research library and about 24,000 knowledgeable and motivated members. In many ways it is a logical place to begin to think about creating the research and data collection capability necessary to advance the profession and its capabilities, but money is still an issue.
Although the ACFE is now firmly established and highly successful, it is doubtful that it has the resources necessary to make any more meaningful contribution to this area than it has already, and the existing contribution has indeed been impressive.
THE NEXT FIVE YEARS
Assuming that the ACFE has 24,000 dues-paying members and that its dues are $125 per year, that gives it a rough cash flow of about $3 million per year. Set against this are the need to support its membership, publish materials, produce and ship a monthly magazine, and maintain its headquarters and staff. There is not much left for either data collection and analysis or research, and when we compare it with the $5 billion Pfizer alone spends annually on research it is indeed puny.
This brings us to organizations that, after all, are the locus of all occupational fraud in the United States. Is it in their interest to consider funding some sort of coordinated data collection and analysis program? I think the answer is yes. They and their forensic professionals have benefited greatly from the work of the ACFE and those few other organizations and academics that evidence an interest in this field, but their vulnerabilities are still vast. If we accept the ACFE figure that occupational fraud may be a $600 billion annual problem in the United States, that means that U.S. organizations, mainly companies and corporations, lost an average of $1.64 billion each day this year, including weekends and holidays. To try to apprehend the magnitude of so staggering a sum, please assume that it will take you about one minute to read this page. At the estimated rate of $1.64 billion per day, U.S. organizations lost $1.14 million to occupational fraud during that minute. At this astonishing rate, one hour’s worth of losses—slightly more than $68 million—would pay for all the fraud data collection and fraud research that has probably ever been done in the United States.
While funding for research, data refinement and collection, and clarification of definitional issues is desperately needed, we should not forget the mainstay of almost all existing fraud deterrence programs—internal audit and forensic investigations. These requirements, too, must be reexamined. We cannot stand still while the forensic field addresses its profound developmental needs, and the mainstream audit and investigations activities have been shown time and again to have a positive impact in reducing occupational fraud or, at least, lessening its impact. In some regards, I am sure there are those who would say this is taking both sides of the argument—questioning our traditional activities while calling for the development of more effective tools and processes. I would disagree. When the first car was produced, all the horses in the United States were not turned loose. There will be a period of overlap, when traditional activities, effective activities, continue as new concepts are developed and tested. The end result will likely be an amalgamation of the old and the new, hopefully in a new and more highly effective paradigm.