[White-Collar Crime] According to ACFE research, the most common method for detecting occupational fraud is:

According to the Association of Certified Fraud Examiners (ACFE) biennial "Report to the Nations," tips are consistently the most common method for detecting occupational fraud. The 2024 report indicates that 43% of occupational frauds were detected by a tip, a figure significantly higher than any other method. This highlights the critical role of reporting mechanisms, such as hotlines, in an effective anti-fraud program. Employees are the source for more than half of all tips, underscoring the importance of internal reporting channels.

B. Internal audit: While a vital proactive control, internal audits detect a much smaller percentage of frauds (14% in the 2024 report) compared to tips.
C. External audit: External audits are not primarily designed to detect fraud and, consequently, uncover only a small fraction of cases (5% in the 2024 report).
D. Management review: This is an important detection method, but it ranks below tips and internal audit, accounting for 13% of detections in the 2024 report.

1. Association of Certified Fraud Examiners (ACFE). (2024). Occupational Fraud 2024: A Report to the Nations. ACFE. Retrieved from https://legacy.acfe.com/report-to-the-nations/2024/.

Reference Point: Page 10

Exhibit 5

"How Occupational Fraud Is Initially Detected

" shows "Tip" as the leading method at 43%. The same exhibit shows Internal Audit at 14%

Management Review at 13%

and External Audit at 5%.

2. Kranacher

M. J.

& Riley

R. (2019). Forensic Accounting and Fraud Examination. Wiley. (Note: This textbook is widely used in university accounting programs and heavily cites ACFE research).

Reference Point: Chapter 2

"The Nature of Fraud

" consistently discusses and references the ACFE's findings

emphasizing that tips are the most common way frauds are brought to light

far exceeding detection by formal audits or controls.

3. West Virginia University. (n.d.). ACCT 426: Fraud and Forensic Accounting. Course Syllabus.

Reference Point: Course materials for advanced accounting and fraud examination programs at reputable universities frequently use the ACFE Report to the Nations as a foundational text to establish the statistical landscape of occupational fraud

including the primary methods of detection. The syllabus often lists the report as required reading for understanding these key statistics.