Question

Fraud impacts to a company:

1) U.S. organizations lose ____ percent of annual revenues to fraud
2) Applied to the estimated 2011 Gross World Product, this _____ percent translates to approximately ____ trillion in losses
3) Fraud affects _____ ______ _____ ______ for goods and services, each of us pays not only a portion of the fraud bill but also for the ________ and ________ of fraud
4) Losses incurred from fraud reduce a firm's income on a ____________ basis
5) For every $1 of fraud, ______ _______ is reduced by $1
6) It takes more revenue to recover the effects of the fraud, since fraud reduces the ______ _______

Answer 1

Fraud leads to significant financial losses for U.S. organizations, amounting to an estimated 5% of annual revenues, which translates to about 3.9 trillion dollars in global losses. It influences market prices, with consumers bearing part of the cost, and for every dollar lost to fraud, there is a direct reduction in net income. Companies must generate more revenue to offset these effects, thereby impacting their bottom line.

Step-by-step explanation:

The impacts of fraud on a company can be significant. If we consider that U.S. organizations lose an estimated 5% of their annual revenues to fraud, this percentage, when applied to the 2011 Gross World Product, translates to approximately 3.9 trillion dollars in losses. These costs are not just monetary but also extend to how fraud affects the market price for goods and services. Because of these fraudulent activities, consumers end up paying not only a portion of the 'fraud bill' but also for the detection and prevention of fraud. Moreover, losses incurred from fraud reduce a firm's income on a dollar-for-dollar basis, which means that for every $1 of fraud, net income is reduced by $1. To recover these losses, it requires more revenue since fraud affects the bottom line.