THE FBI ANNUAL REPORTS SHOWED A LARGE INCREASE IN INVESTIGATIONS OF ALLEGED FRAUD VIOLATIONS IN INSURED COMMERCIAL BANKS DURING 1968-71. AT THE SAME TIME, HOWEVER, ASSETS INCREASED OVER 28.2 PERCENT AND PERSONNEL INCREASED OVER 22.8 PERCENT. THE SURVEY COLLECTED FRAUD DATA FOR 1968-70 TO DETERMINE WHERE INTERNAL BANK FRAUDS OCCURRED AND WHETHER ANY DEPARTMENT OR ACCOUNT WAS VULNERABLE. DATA WERE REQUESTED FOR 12 GENERAL LEDGER ACCOUNTS OR DEPARTMENTS ON AMOUNTS, CONCEALMENT PERIOD, METHOD USED, PERSONS INVOLVED, AND THE INCIDENCE OF COLLUSION. INFORMATION WAS GATHERED FROM 267 BANKS WITH A TOTAL OF 1,932 INTERNAL FRAUDS. THE BANKS REPORTED INCREASES IN THE NUMBER OF FRAUDS, SUBSTANTIATING FBI STATISTICS. THE LARGER THE BANK, THE LARGER THE INCREASE IN FRAUDS. MOST (91 PERCENT) INTERNAL FRAUDS INVOLVED LESS THAN $10,000. THE FOUR MAJOR AREAS OF FRAUDS WERE IN CASH AND CASH ITEMS (46.8 PERCENT), DEMAND DEPOSITS (18.6 PERCENT), TIME DEPOSITS (8.2 PERCENT), AND CONSUMER CREDIT LOANS (5.3 PERCENT). ALL THESE AREAS REQUIRED AUDIT ATTENTION BECAUSE OF THEIR VULNERABILITY TO FRAUD. INTERNAL CONTROL SYSTEMS WERE EFFECTIVE IN KEEPING THE FRAUDS IN THESE AREAS TO SMALL AMOUNTS. FRAUDS OVER $10,000 MADE UP ONLY 9 PERCENT OF THE TOTAL FRAUD OCCURRENCES AND WERE FOUND MAINLY IN THE TRUST AND LOAN AREAS. TELLERS WERE INVOLVED IN THE VAST MAJORITY OF FRAUDS IN THE CASH AND CASH ITEMS AREA. BANK CLERKS WERE INVOLVED IN ALMOST 3 OUT OF 10 FRAUDS. THE NUMBER OF FRAUDS INVOLVING COLLUSION WAS ONLY 6 PERCENT, BUT INCREASED DURING EACH YEAR OF THE STUDY. TABLES ILLUSTRATE STATISTICS THROUGHOUT, AND AN APPENDIX BREAKS DOWN THE STUDY AREAS BY DEPARTMENTS.