detect and prevent procurement fraud with data analysis
TRANSCRIPT
DETECT & PREVENT PROCUREMENT FRAUD WITH DATA ANALYSIS
AGENDA
• Understanding Fraud• Data Analysis• Easy to Run Data Analytics Tests• Measuring Success• Summary • Q&A
UNDERSTANDING FRAUD
The Fraud Triangle – Donald Cressey
Opportunity
Incentive
Rationalization
LOSS FROM FRAUD
Source: 2014 ACFE Report to the Nations
FRAUD IN THE REAL WORLD
Source: 2014 ACFE Report to the Nations
DURATION OF FRAUD
“The average time taken to detect fraud is 18 months.”
Source: 2014 ACFE Report to the Nations
DRIVERS OF RISK MANAGEMENT
Risk is high on the agenda for Boards today due to:• A focus on cost reduction• A desire for added value• An evolving regulatory environment• Technological changes and availability of data
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TYPES OF RISK
• Duplicate payments• Illegitimate invoice numbers• Fraudulent invoices• Check theft• Segregation of duties• Abnormal vendors• Policy violations
ANTI-FRAUD REVIEWS
Accounts Payable/Human Resources Testing• Vendor Master File (incomplete records, shared addresses,
TIN, phone)• Invoice Testing (even dollar, sequential, numbering)• Employee Testing (SSN, shared addresses, bank accounts)• Shell company (vendors and employees sharing info –
addresses, bank accounts
DATA ANALYSIS: TECHNOLOGY
• Able to analyze entire data populations • Makes data imports easy to accomplish• Preserves data integrity• Allows for accessing, joining, relating, and comparing data
from multiple sources
Enhances fraud detection capabilities Audit trail & automation
PROACTIVE PROCUREMENT ANTI-FRAUD REVIEWSFraud risk: • Shell companies
Analysis• A/P Analysis• Shared Vendor Addresses
SUMMARIZE INVOICE FILE
SUMMARIZE INVOICE FILE
JOIN VENDOR MASTER TO INVOICE DATA
JOIN VENDOR MASTER TO INVOICE DATA
APPEND ADDRESS NUMBER FIELD
APPEND ADDRESS NUMBER FIELD
DUPLICATE KEY DETECTION SEARCH
DUPLICATE KEY DETECTION SEARCH
DUPLICATE KEY DETECTION SEARCHCheck for related companies
DUPLICATE KEY DETECTION SEARCHPotential related companies
DUPLICATE KEY EXCLUSION SEARCHTo extract out same name vendors
DUPLICATE KEY EXCLUSION SEARCHTo extract out same name vendors
DUPLICATE KEY EXCLUSION SEARCHFinal results before manual review for “false positives”
SUMMARY
• Identify areas with a significant risk of fraud or with recurring issues
• Start in an area you know well• Ensure you understand the data you’re analyzing• Leverage your pre-existing analytics• Utilize specialized audit analytics tools
DETECT & PREVENT PROCUREMENT FRAUD WITH DATA ANALYSIS
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