Type to search

Featured General Biz News

Occupational fraud costs $1.9B+ to P.R. economy, CPA study shows

Occupational fraud represents a loss of more than $1.9 billion to Puerto Rico’s economy, or 2.77 percent of the $70.5 billion Gross Domestic Product, according to a study commissioned by the Puerto Rico College of Certified Public Accountants.

The problem is a considerable issue that must be addressed by the companies or entities involved, CPA officials said.

“Occupational fraud is a global problem that poses a threat to businesses today. It is a great phenomenon that affects practically every entity and detecting it represents a challenge for many organizations,” said Ramón Ponte-Tápanes, head of the professional organization.

“Entities of different sizes, from the public and private sectors, have been victims of this type of crime, violating the employer’s trust and causing harsh and severe damage to the economy,” he said

Last year, The cost of asset appropriation and corruption was higher in Puerto Rico than in the U.S. mainland. However, companies with a formal anti-fraud system to receive complaints reported fewer losses, the study noted.

Cash theft proved to be the most common fraud, so rigorous accounting controls must be established.

According to the study, the types of occupational fraud can be divided into three classifications: Asset appropriation (theft of money or misuse of assets;) Corruption (use of power to obtain personal benefit;) and adulterated or fraudulent financial statements.

Two organizations, the Association of Certified Fraud Examiners and the Institute of Certified Internal Auditors, collaborated with the CPAs to develop the study, gathering and analyzing information obtained through an online survey, said Eduardo González-Green, chairman of the CPA College’s Non-Traditional Services Committee.

“In 2006, the CPA College Foundation conducted a study on occupational fraud in Puerto Rico limited to the private sector of our economy and the results were very interesting and useful,” said González-Green.

“Unlike the 2006 study, the 2018 Study was designed for every organization, including the government. The total number of people who answered the survey was 281, of which 131 met the established requirements of those who have experienced or participated in the investigation of a fraud incident in the past three years, where said investigation has concluded and the perpetrator has been identified,” he said.

In the 2006 study, which did not include the government sector, the average loss reported by the participants was 2.2 percent of the GDP, which is equivalent to a of fraud- and abuse-related loss of some $860 million, González-Green said.

Based on the result’s findings, the College of CPAs suggested that organizations establish a system to receive complaints to put a stop to on-the-job fraud.

“No one is exempt from this problem, it can happen to any company, to universities, to the government, to the bank, in short, we must all prepare ourselves to be able to fight it,” Ponte-Tápanes said.

Author Details
Author Details
This story was written by our staff based on a press release.
Tags:

Leave a Comment

Your email address will not be published. Required fields are marked *