Occupational fraud can occur at any level of an organization, but misconduct by owners and senior executives can be especially costly. These individuals often have greater authority, broader access to financial information, and the ability to override internal controls.

According to the Association of Certified Fraud Examiners (ACFE), owners and executives represented 16% of occupational fraud perpetrators in its 2026 Report to the Nations. The same report found that owner/executive fraud had a median loss of $475,000, compared with $50,000 for employee-level fraud. Even when you trust your leadership team, safeguards at the top matter. A strong fraud risk management approach can help your organization strengthen accountability, identify warning signs, and respond appropriately when concerns arise.

Why It Happens

Forensic accountants commonly use the “fraud triangle” to understand occupational fraud. It focuses on three factors that generally need to be in place for people to steal from their employers: pressure, opportunity, and rationalization.

Pressure can be personal or professional. An executive facing financial difficulties or aggressive performance targets may be tempted to manipulate financial results. The ACFE found that perpetrators experiencing excessive organizational pressure are associated with a median fraud loss of $532,000 — the highest among the behavioral warning signs identified.

Opportunity exists when someone has the access or authority to commit and conceal wrongdoing. Executives pose an elevated threat because they may approve transactions, influence employees, or override established procedures. More than half of the ACFE report’s cases involve either inadequate or overridden controls.

Rationalization occurs when perpetrators can justify their dishonest behavior. Executives might, for example, believe they are entitled to steal because their compensation is inadequate or that manipulating results is acceptable because it will eventually benefit the business.

You can help reduce fraud risk by keeping this triangle in mind and promoting an anti-fraud culture. For instance, try to set realistic, achievable performance goals and intervene if executives seem excessively entitled or secretive.

Strengthen Safeguards At The Top

Internal controls that protect key functions — such as your accounting, shipping, and receiving departments — are also essential. But preventing executive fraud may require additional measures. For example:

• Establish clear rules for overriding controls, including requiring a second approval and documentation explaining why the exception is necessary
• Mandate fraud awareness training for employees, including executives
• Conduct management reviews, surprise audits, and financial monitoring activities
• Offer tiplines or web portals that enable employees to anonymously report suspected wrongdoing

 
Reporting systems are especially important because tips remain the most common way to detect occupational fraud. The 2026 ACFE study found that 43% of cases are uncovered through tips, and employees provide more than half of them (other tips come primarily from vendors and customers). Because of the risks of retribution, confidentiality is critical if you want workers to blow the whistle on crooked executives.

Allegations involving a senior executive or other influential individual may warrant engaging an independent fraud specialist to help ensure an objective investigation, including evidence, gathering, and witness interviews. If fraud is confirmed, your organization should respond based on the circumstances, applicable laws, and its own policies, not the perpetrator’s position.

Promote Accountability

Executive fraud may never be completely preventable, but you can make it harder to commit and easier to detect. To promote accountability, implement strong controls, effective employee training, and confidential reporting mechanisms. Contact us for help assessing fraud risks and strengthening the safeguards that will protect your business.