Fraud in 2024: Where We Are, Why We’re Here & What to Do About It

If you’re gearing up for fraud in 2024, you’re not alone. Early January is a natural time to look back, assess where we are, project forward to where we prefer to be, and make conscious decisions about any actions needed to correct course.

In that regard, it’s clearly a critical inflection point for business professionals like us.

• We’ll move forward, maintain the status quo, or fall further behind.
• Organizations will fix the problems they face or find they will pay an increasing cost for kicking them down the road and ignoring them for another year.
• You and I will speak up loud and clear about our legitimate business controls, compliance, performance, and integrity concerns, or we’ll plug along quietly in the hope of avoiding making waves.

I’ve been an auditor, consultant, professional speaker, skills trainer, and business operator for 46 years. I’ve worked in huge consulting firms and corporations and mid-sized specialty compliance consulting firms, and for most of my business life, I’ve been my own boss. I’ve been fortunate to work with hundreds of client organizations and hundreds of thousands of auditing, compliance, accounting, and management experts like you. Business fraud risk management has been my technical specialty since 1990—over 33 years.

It is from this legitimate foundation that I am as concerned (make that scared) about business fraud risks in 2024 as I have ever been.

4 Macro-Level Trends Affecting Fraud in 2024

As it relates to fraud in 2024 in general and business fraud specifically, the outlook is not good. I attribute this perspective based on four macro-level concerns.

1 | The disconnect between business ethics in principle and business integrity in action is very much present and growing larger each day.

Let me explain…

Ethics is a philosophical discipline. It’s about our personal and organizational beliefs about right and wrong. It’s about what’s acceptable behavior and what isn’t acceptable. And if there’s any doubt about an individual’s ethical beliefs, employers and membership organizations normally state the ethical standards we consciously accept as employees or members.

Integrity, on the other hand, is all about actions. In short, do leaders, employees, and members act in accordance with stated ethics policies? And when they don’t—when pressures for results or personal preferences push humans away from their stated or accepted ethical standards—now we’re operating in the field of ethics-integrity disconnect. Or perhaps better said, misconduct, wrongdoing, theft, and outright fraud.

What do you think? Is this gap between ethics and actions growing?

Through online training webinar poll questions, I asked over 3,000 business participants this very question in December 2023. Of those who responded, 88% believed the gap between business ethics and actions was growing in the last two years. That is a scary statistic, indeed—and a major concern for fraud in 2024.

For context, that’s since the informal end of the pandemic shutdown and the beginning of what many call the “new normal” period in business, government, education, and not-for-profit operations.

2 | Many business and government leaders at all levels are demonstrating disrespect for truth, integrity, and common decency.

Not every leader, of course. Not the majority. But far too many in the growing minority feel that they are above the rules and are tired of trying to do what’s right while they witness other leaders ignoring the rules and benefiting financially and professionally as a result. Their refrain becomes, “Why should I do what’s right when (fill-in-the-blank prominent government or business leader) does whatever they want without meaningful accountability?”

To be fair, I slipped that in on you—the concept of accountability for wrongdoers, thieves, and fraudsters. Again, a question I’ve asked those 3,000 recent webinar participants was the following: Do you feel that those who are caught stealing, lying, violating laws or policies, or committing business fraud are being held appropriately accountable? And again, I received a resounding response of “no,” from 85% of those asked.

By the way, those webinar participants self-identify as follows:

• 80% internal audit or government audit
• 5% compliance leadership
• 8% accounting, finance, IT, or other business leadership
• 5% business consulting
• 2% educators, business owners, retired professionals, and journalists

And for what it’s worth, they bring an average of just over 20 years of business experience. That’s 3,000 participants with 20 years of experience, which equals 60,000 years of combined experience. I think that’s worth a lot and indicates a potential concern for fraud in 2024.

3 | Everyday business controls are being stressed like never before, the cracks are becoming increasingly apparent, and reported control failures are growing in number.

In business-focused organizations around the globe—including for-profit, not-for-profit, government, and education entities—there are several important trends having an impact on the reliability of anti-fraud controls.

• Limited qualified staff
• Remote worksites
• Materials and equipment shortages
• Uncertainties over political, national, and international security
• Concerns about energy, water, and food reliability

Plus, there is a long list of other known and acknowledged business risks for fraud in 2024.

Combined, they put pressure on controls and related behaviors designed to deter or prevent fraud. Even the best-designed control procedures fall apart when the humans in the equation are tired, stressed, untrained, or uninformed—or just stop caring. And there is a lot of that going on right now. Just ask your favorite internal or government auditor.

Every business control has two components: the designed and implemented procedure—what we see documented in policies and process flowcharts—and the human execution of those designed procedures.

In my work, I’ve been tracking since 1998. Well over 90% of the time, when anti-fraud controls fail, it is an issue of human execution—not control design. It’s due to approval signatures without thought, misplaced trust, blind acceptance of whatever appears before approvers in documents or on their computer screen, lack of skills, lack of training, or just accepting the situation and giving up any effort to improve.

4 | There is a rise in artificial intelligence and disinformation in support of wrongdoing, lies, theft, and fraud.

I am writing this on January 9, 2024. Here’s the title of a featured article that caught my eye in today’s New York Times: “Elections and Disinformation Are Colliding Like Never Before in 2024.” The subtitle: “A wave of elections coincides with state influence operations, a surge of extremism, A.I. advances, and a pullback in social media protections.”

An increasingly common reaction is, “Yeah, so… that’s just the way things are right now. What am I supposed to do about it?”

And there we have it. The general feeling that these macro-level trends of…

• Ethics-integrity disconnect
• Leadership’s private and very public disrespect for ethics, truth, honesty, and integrity
• Cracks and failures in critical anti-fraud business controls
• Intentional efforts by nation-states, partisan politicians, and business leaders to cross the legal and ethical lines for their own benefit
• Plus the accelerating effect of using large-scale technology-based disinformation, advertising, and social media campaigns

…are just too big for us to handle. The result is a feeling of powerlessness, malaise, and acceptance.

Well, I’m not giving in. And I ask you to come along for the ride.

What We Can Do Moving Forward

If this article caught your attention, there’s a good chance you are an auditor, compliance expert, finance or accounting leader, consultant, or hold any number of other critical management leadership and control positions.

If you have read this article to this point, you are either in agreement with me, strongly disagree with me, or are open to thinking a little deeper on the topic of fraud in 2024 than you might have done yesterday. I’ll take any of those positions as a positive reaction.

I acknowledge that my writing here is a little bit preachy. (Okay, very preachy!) That’s intentional. Because after these 46 years of work experience, thousands of interactions with experts like you, personally handling dozens of fraud cases, and leading over 2,500 live highly interactive skills training presentations on fraud risk management topics, I have a few suggestions.

• Remember that we are the solution to the growing problem of business fraud.

You and me. Together. Not our senior business leaders. Not our government leaders. Not the courts, the press, or the general public. If any or all of them want to get on board and get really serious about fraud prevention, all the better. But I’m no longer waiting for that to occur. And neither should you. It’s up to us.

Here’s the acid test question: Have your executives or clients invested the time and funding to provide meaningful, skills-based action training to employees and supervisors so that they know exactly what to do, when to do it, and how to do it to prevent fraud?

If your answer is “no,” leadership isn’t fully committed to fighting fraud in 2024, regardless of how many announcements they make or policies they issue.

Together and individually, you and I have the knowledge and the skills to prevent and promptly detect wrongdoing, misconduct, theft, and outright fraud. And as auditors, compliance experts, finance, accounting, IT, and other management leaders, we also have the platform to communicate to others exactly what needs to be said and taught to every single employee and manager. Maybe it’s time to get this effort underway.

• Every day, we have the opportunity to influence at least one person.

We can teach them the meaning behind daily control steps. We can explain the why of a preventive procedure before addressing how to do it. This is the best anti-fraud skills training opportunity—one-on-one, boss to staff, auditor to client. Day in and day out. Just once each day. Imagine what a difference a few months of this minor effort could produce in addressing fraud in 2024 and beyond!

• We could build the content of formal, comprehensive fraud risk management skills training programs.

Focus on the issues, documents, and transactions employees see daily. This includes things like time sheets, travel reimbursement requests, journal entries, transaction summaries and related control reports, variance reports, and vendor and contractor invoices.

Then, offer that training content to your human resources or other employee development teams. Maybe even offer to teach these programs yourself.

Auditors: Find a way to work within our professional standards of objectivity and independence. Let’s stop using these boilerplate terms as an excuse to sit on the sidelines.

• Write articles on good questions to ask yourself before you put your approval signature on documents.

Publish those checklist articles in in-house or client newsletters, on audit department sites, on the wall next to the coffee pot, or anywhere anyone might see them.

There is a commonality in these four suggestions. They are all steps we can take ourselves—no major corporate initiative necessary. You just need the will to go ahead and do it.

Get Ready for Fraud in 2024

There’s a quote from former U.S. president Teddy Roosevelt that, 15 years ago, changed every aspect of my business efforts: “Do what you can, with what you have, where you are.” This is simple advice that might bring back a measure of sanity and solutions in an increasingly challenging, fraud-filled business world. We should keep it in mind as we move forward and prepare to tackle fraud in 2024.

Let’s get started together today. Contact Hall Consulting and let us know how we can help.

This article originally appeared on johnhallspeaker.com