Conducting Internal Investigations

Transcription

1 Conducting Internal Investigations Investigating Fraud Using Data Analytics 2018 Association of Certified Fraud Examiners, Inc.

2 Data Analytics The use of analytics software to identify trends, patterns, anomalies, and exceptions within data 2018 Association of Certified Fraud Examiners, Inc. 2 of 27

3 Data Analytics Useful with a variety of data, including: Accounting data Sales figures Inventory records Invoices Shipping data Internal communications ( s) Customer account data 2018 Association of Certified Fraud Examiners, Inc. 3 of 27

4 Structured Versus Unstructured Data Structured data: the type of data found in a database, consisting of recognizable and predictable structures Sales records Financial reports Unstructured data: data not found in a traditional spreadsheet or database s Human resources files 2018 Association of Certified Fraud Examiners, Inc. 4 of 27

5 Big Data Information of extreme size, diversity, and complexity Allows complex and high-volume data to be analyzed in ways that can help make decisions regarding fraud risks and internal controls 2018 Association of Certified Fraud Examiners, Inc. 5 of 27

6 Data Analysis Software Functions Most commercial data analytic programs offer both standard and customizable analytics tests, such as: Sorting Record selection Joining files Multi-file processing Correction analysis Verifying multiples of a number Compliance verification Duplicate searches 2018 Association of Certified Fraud Examiners, Inc. 6 of 27

7 Sorting Arranges the data in a meaningful order Alphabetical Numerical (e.g., invoice number) Amount Date 2018 Association of Certified Fraud Examiners, Inc. 7 of 27

8 Record Selection Identifies all occurrences of items or records in a field that meet specific criteria Lists only those items matching the criteria Reduces large amounts of information to concise lists, saving time and focusing the investigation 2018 Association of Certified Fraud Examiners, Inc. 8 of 27

9 Joining Files Gathers together specified parts of different data files Combines fields from two sorted input files into a third file 2018 Association of Certified Fraud Examiners, Inc. 9 of 27

10 Multi-File Processing Allows the relating of several files by defining relationships between multiple files without the use of the join command Can compare an outstanding invoice file to an accounts receivable file by customer number 2018 Association of Certified Fraud Examiners, Inc. 10 of 27

11 Correlation Analysis Identifies relationships between variables in raw data Requires a strong correlation between independent and dependent variables Independent Variable Number of days traveled Number of houses built Quantity of paper produced Dependent Variable Hotel cost Paint used Starch consumed 2018 Association of Certified Fraud Examiners, Inc. 11 of 27

12 Verifying Multiples of a Number Checks calculations to ensure that multiplied unit costs are correct Mileage rates Tax rates 2018 Association of Certified Fraud Examiners, Inc. 12 of 27

13 Compliance Verification Determines whether transactions meet established company policies Amount limits Employee access 2018 Association of Certified Fraud Examiners, Inc. 13 of 27

14 Identifies duplicate records, such as payments of invoices Duplicate Searches 2018 Association of Certified Fraud Examiners, Inc. 14 of 27

15 Date Functions Searches for differences in dates, such as invoice dates Can be used to check for payments made on unusual dates, such as weekends and holidays 2018 Association of Certified Fraud Examiners, Inc. 15 of 27

16 Graphs Provides a quick summary of complex data 2018 Association of Certified Fraud Examiners, Inc. 16 of 27

17 Benford s Law In 1938, Frank Benford discovered that certain numbers appeared more frequently in certain digits than others. Many fraudsters fail to consider this nonintuitive pattern. Digit 1 st 2 nd % % 11.39% % 10.88% % 10.43% % 10.03% % 9.67% % 9.34% % 9.04% % 8.76% % 8.50% 2018 Association of Certified Fraud Examiners, Inc. 17 of 27

18 Commercial Data Analytics Programs ACL IDEA SAS Monarch Arbutus Analyzer Oversight Systems software suite Tableau Server 2018 Association of Certified Fraud Examiners, Inc. 18 of 27

19 Spreadsheets and databases Customized data analysis programs Shareware and freeware Noncommercial Data Analysis Solutions 2018 Association of Certified Fraud Examiners, Inc. 19 of 27