detect and prevent procurement fraud with data analysis

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

Visit casewareanalytics.com Email salesidea@caseware.com