Internal Audit is confident that the vast majority of City employees are competent, ethical people doing a great job for the citizens of Sioux Falls.
The term “fraud” has a very specific legal meaning. However, in this report we use the term in a general way to refer to such things as an employee stealing cash from an organization, an employee receiving kickbacks from a vendor, an employee converting organization assets to their own use, falsifying time cards to receive unearned overtime, stealing equipment and converting it to cash, etc.
The Association of Certified Fraud Examiners (ACFE) is the premier organization studying fraud and providing training and certification in fraud prevention and detection. In their 2004 Report of Occupational Fraud and Abuses, the ACFE reports a typical organization loses 6% of its annual revenues to fraud. The ACFE’s figure is just a best guess; many companies do not report frauds and many corporate scams go unnoticed.
We have no reason to believe that the City of Sioux Falls is losing anywhere near 6% of its annual revenues to fraud; however, fraud is a real risk in any organization with over 1,400 full-time and temporary employees and a budget of over $360,000,000.
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