Key points covered in this article:

• The 2026 ACFE Report to the Nations found that organizations lose an estimated 5% of annual revenue to occupational fraud, with total analyzed losses exceeding $3.4 billion across 2,402 cases. Asset misappropriation was the most common type of fraud, while financial statement fraud was the least common but the most costly.
• Fraud can occur in any department or level of authority, but losses tend to increase significantly when owners, executives, or longer-tenured employees are involved. Many schemes go undetected for a year or more, making early warning signs, employee reporting channels, and consistent oversight especially important.
• The report reinforces the value of strong internal controls, fraud awareness training, management review, and proactive monitoring. Organizations that invest in layered prevention and detection measures are better positioned to catch fraud earlier and reduce both financial and reputational damage.

The Association of Certified Fraud Examiners (ACFE) just released its 2026 Report to the Nations, widely considered the gold standard in forensic accounting research. Researchers analyzed 2,402 cases across 143 countries and territories, all investigated and closed between January 2024 and September 2025. Total global losses topped $3.4 billion. 

One of the most striking findings is that organizations lose roughly 5% of annual revenue to occupational fraud every year, according to ACFE estimates. Few financial risks are this persistent, or this expensive. 

So where does fraud start, and what actually stops it? The findings below dig into both, offering organizations a way to shape their own prevention and detection strategies.  

What Are the Most Common Types of Fraud?

The report groups occupational fraud into three categories.   

Asset misappropriation is the most common, at 90% of cases. These schemes involve stealing or misusing company assets and include billing schemes, payroll fraud, expense reimbursement fraud, check tampering, and inventory theft. The median loss for this category is the lowest of the three at $100,000. This is likely because asset misappropriation tends to involve smaller, more incremental amounts taken over time. 

Corruption occurred in 45% of cases and had a median loss of $150,000. This category includes bribery, kickbacks, conflicts of interest, and other situations in which an individual improperly uses their influence in a business transaction for personal benefit. 

Financial statement fraud is the least common category, with just 6% of cases, but it has the highest median loss at $1 million. These schemes intentionally misstate financial information by overstating revenue and assets or understating liabilities and expenses. 

About 38% of cases involved more than one category, most often a combination of asset misappropriation and corruption. It’s a reminder that fraud often involves multiple parts of an organization.  

Fraud Touches Every Department and Every Level of Authority 

More than half of all cases came from just five departments: operations, accounting, sales, customer service, and executive or upper management.  

Managers and employees each accounted for 41% of cases, and owners and executives made up the remaining 16%, with the position of the fraudster having a major effect on cost. Owners and executives caused a median loss of $475,000. That’s more than nine times higher than the $50,000 median loss tied to staff-level employees. Managers fell in between at $125,000. 

Tenure followed a similar pattern. Perpetrators employed less than a year caused a median loss of $50,000, compared with $100,000 for those employed one to five years, $138,000 for six to ten years, and $200,000 for more than a decade. Longer tenure didn’t make fraud more frequent, but it consistently made it more expensive. One possible explanation is that longer-tenured employees often accumulate greater access, institutional knowledge and trust, all of which are factors organizations should consider when designing controls. 

Fraud Often Goes Undetected, Though Common Red Flags Can Help

The typical fraud scheme ran 12 months before detection, though certain schemes lasted far longer. Financial statement fraud took a median of 24 months to catch, and fraud by owners and executives ran a median of 23 months, which is nearly three times as long as fraud committed by employees. 

Behavioral red flags offer one of the clearest opportunities to catch fraud early. About 84% of fraudsters displayed at least one warning sign before they were caught, and more than half displayed multiple.  

Living beyond one’s means was the most common, showing up in 39% of cases, followed by financial difficulties at 29% and unusually close relationships with vendors or customers at 17%. None of these behaviors confirm wrongdoing by themselves, and 16% of cases showed no red flags at all. These behaviors may be worth a second look, however, if paired with weak or missing internal controls or an irregular transaction.  

Employee tips remained the most common way fraud was uncovered, accounting for 43% of cases. The next most common methods for finding fraud were internal audit at 15% and management review close behind at 13%. Of those tips, 55% came from employees, a sign that internal reporting channels and workplace culture play an outsized role in catching fraud early. 

Strong Internal Controls Make a Measurable Difference

The vast majority of fraud cases can be traced back to internal control failures. A simple lack of controls accounted for 33%, management override of existing controls accounted for 19%, and lack of management review accounted for another 18%. Here, the data shows that most fraud occurs because the right safeguards were missing, inconsistent, or bypassed by someone senior enough to get around them. 

The report also shows what happens when organizations get controls right. Management review was associated with 55% lower median losses. Proactive or automated data monitoring was associated with a 53% reduction, while surprise audits reduced median losses by 50%. 

Training made one of the clearest differences of all. Organizations that trained both employees and management on fraud awareness reported a median loss of $84,000, compared to $150,000 for organizations that did not offer training. That’s a 44% reduction tied to one investment, yet only 47% of private companies currently provide that training. Proactive training could be one of the biggest opportunities for organizations looking to reduce fraud risk.  

Of course, no single control eliminates fraud risk on its own, but organizations that combine several, prevention, detection, and active oversight together, consistently catch problems earlier and limit the both financial and reputational damage. 

Fraud Risks by Industry

Construction — Median loss $120,000. Billing fraud, corruption, and payroll schemes were the most common. Decentralized job sites, subcontractor relationships, and vendor spending make purchasing and payment controls especially important. 

Healthcare — Median loss $100,000. Billing fraud, payroll schemes, and corruption were among the most common. Complex reimbursement processes and purchasing activity increase the importance of financial oversight. 

Manufacturing — Median loss $170,000. Inventory theft, billing fraud, and corruption were the most common schemes. Inventory management, procurement, and supply chain activities create additional opportunities for fraud if controls are weak. 

Not-For-Profit, Charitable, or Social Services — Median loss $76,000. Billing fraud, check and payment tampering, and corruption occurred most frequently. Losses were lower than in several other industries, but limited staff and financial resources can make fraud harder to absorb or detect. 

Real Estate — Median loss $250,000, among the highest of the industries studied. High-value transactions can increase the financial impact of fraud when internal controls aren’t operating as they should.  

Government and Public Administration — Median loss $100,000. Corruption, billing fraud, and noncash crimes were the most common. Procurement activities and limited staff reinforce the need for effective oversight and accountability. 

Looking Ahead

The findings from the 2026 Report to the Nations confirm that occupational fraud is still a risk to organizations of every size and in every industry. The data also shows a positive story, with strong internal controls and active oversight successfully reducing both the duration and severity of losses. If your organization needs help conducting a fraud risk assessment, reviewing internal controls, or building a comprehensive fraud prevention program, contact PBMares today.