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Workplace fraud costs small – and medium-sized Canadian businesses $3.2 billion

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Workplace fraud affected roughly one-quarter of Canadian small- and medium-sized businesses in 2010, costing an estimated $3.2 billion, according to a survey by the Certified General Accountants Association of Canada (CGAAC).

Roughly 290,000 companies were victims of at least one instance of workplace fraud last year, the survey found.
Of those companies surveyed, 59% do not undertake periodic assessments of the risks of fraud and 74% believe their exposure to occupational fraud is low.

The survey suggests the vast majority (80%) of respondents were not prepared to respond to occupational fraud.

The most common type of workplace fraud cited by small and medium enterprises (SMEs) is misappropriation of inventory or assets, followed by misappropriation of cash. Of those companies that experienced the types of fraud listed above, at least one-fifth confirmed that the fraud occurred four or more times in the last fiscal year, the CGAAC survey reported.

More than 80% of the SMEs reported losses of up to $5,000. While the monetary losses may not seem large, the CGAAC cautioned that workplace fraud can cause significant long-term damage for organizations.

"Sixty-one per cent of victimized companies say that fraud negatively affects employee morale," the survey says. "Business relationships, company reputation, company valuation and public and client trust are also adversely affected."

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