Alberta has highest median monetary fraud rate: MNP report

Study of over 200 criminal convictions gleans critical insights about how Canadian organizations can reduce fraud

Mario ToneguzziThe first national study of its kind, Fraud Aware 2019: National Study on Reported Fraud Cases in Canada, has found that the most convictions and the largest reported losses due to fraud were seen in Ontario, Quebec, Alberta and British Columbia.

Business advisory and accounting firm MNP LLP released the results of the study on Thursday. They show that Ontario led the way with the most frauds at 122 and B.C. had the largest total losses with $14.3 million.

Resource-rich Alberta had the highest median monetary fraud at $1.25 million, with Newfoundland and Labrador close behind ($1.01 million), it said.

The study compiled data from over 200 criminal convictions of fraud to glean critical insights about how organizations can reduce the instances of this type of crime in Canada.

“This comprehensive analysis provides Canadian business leaders with information that can help protect their companies,” said Greg Draper, vice-president of valuations, forensics and litigation support at MNP. “We know fraud happens regularly at businesses throughout the country but using this report, we can pinpoint what businesses should watch for and the most common vulnerabilities.”

According to the report, the top fraud schemes were stock price manipulation, Ponzi schemes, GST fraud, investment fraud, cash misappropriation, mortgage fraud, and tax evasion. But MNP said two types were the runaway leaders in terms of costliest frauds – 15 Ponzi schemes led to $549 million in losses and two cases of stock price manipulation totalled $87 million. Of the 206 prosecuted cases reviewed, the majority of the fraud schemes lasted about three years, it said.

“Preventative and detective measures are important as fraud losses grow exponentially after one year in duration,” said Draper. “Information like common types and length of the crimes as well as details about post-detection prosecution underscore the need for organizations to become aware of their vulnerabilities and take a proactive approach to fraud prevention.

“Most companies never think they have a fraud issue until the dollars go out the door. What’s worse is that many organizations are operating with a false sense of security – they might think they can count on the police or criminal courts to get the money back if fraud occurs. But recouping losses is very difficult. Even if restitution is ordered it is rarely for the full amount and very often not complied with.”

The report found that individuals over the age of 65 – many of whom hold positions of trust and power with an organization – executed the largest frauds in Canada. Fraud is committed, by and large, out of greed, which was the motivation for 63 per cent of the frauds researched. Other motivators included gambling, financial hardships, drug addiction and relationships.

– Mario Toneguzzi for Calgary’s Business

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