CSO — Bernard Madoff, Allen Stanford and California money manager Danny Pang may be the latest examples of outrageous fraud. But what about the little guys? The administrator, middle manager or call-center rep?

It doesn't take a high-profile, multibillion-dollar scandal to rock an enterprise. These days, when employers are cutting salaries, staff and bonuses--and staff is uncertain about the next round of layoffs--more employees are committing fraud, according to a study by the Association of Certified Fraud Examiners. More than half of fraud examiners surveyed said that the level of fraud has slightly or significantly increased in the previous 12 months compared to the level of fraud they investigated or observed in years prior.

U.S. organizations lost 7 percent of their annual revenues to fraud between 2006 and 2008 for an estimated total cost of $994 billion in losses, according to the ACFE. That's a slight uptick from the 5 percent loss reported for the two-year period ending in 2006.

What's more, about half cited increased financial pressure as the biggest factor contributing to the increase in fraud, compared to increased opportunity (27 percent) and increased rationalization (24 percent).

Fraud can include minor things like expensing personal items or major, fraudulent billing schemes carried out over months or years. "They're using the corporate credit cards for expenses that are really tying back to people in the accounting department to fill their own needs," says Adam Safir, COO of security consulting firm Safir Rosetti in New York. "We've had clients where individuals have racked up $500,000 worth of transfer payments to various parties that were done piecemeal through small [charges]" over several months.

Also see the in-depth Anatomy of a Fraud

Making matters worse, layoffs are affecting organizations' internal control systems, according to the ACFE study. Nearly 60 percent of companies say they had experienced layoffs during the past year. Among those who had experienced layoffs, more than a third said their company had eliminated some controls for preventing fraud.

Warning Signs of Fraud

- Excessive or inappropriate contact with a particular vendor, or a familial relationship between an employee and vendor, can lead to fraud. Sloppy record-keeping can also mask illicit activity.

- An employee who is living beyond his or her means or is known to be having financial difficulty may become desperate enough to commit fraud.

- "We've seen people withdrawn or becoming very hostile," who were committing fraud, says Adam Safir, COO of Safir Rosetti. There are also cases where employees maintain a low profile and "fly under the radar" while keeping a fraud scheme going for months.

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