detect and prevent procurement fraud with data analysis
TRANSCRIPT
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DETECT & PREVENT PROCUREMENT FRAUD WITH DATA ANALYSIS
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AGENDA
• Understanding Fraud• Data Analysis• Easy to Run Data Analytics Tests• Measuring Success• Summary • Q&A
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UNDERSTANDING FRAUD
The Fraud Triangle – Donald Cressey
Opportunity
Incentive
Rationalization
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LOSS FROM FRAUD
Source: 2014 ACFE Report to the Nations
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FRAUD IN THE REAL WORLD
Source: 2014 ACFE Report to the Nations
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DURATION OF FRAUD
“The average time taken to detect fraud is 18 months.”
Source: 2014 ACFE Report to the Nations
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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
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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
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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
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PROACTIVE PROCUREMENT ANTI-FRAUD REVIEWSFraud risk: • Shell companies
Analysis• A/P Analysis• Shared Vendor Addresses
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SUMMARIZE INVOICE FILE
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SUMMARIZE INVOICE FILE
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JOIN VENDOR MASTER TO INVOICE DATA
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JOIN VENDOR MASTER TO INVOICE DATA
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APPEND ADDRESS NUMBER FIELD
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APPEND ADDRESS NUMBER FIELD
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DUPLICATE KEY DETECTION SEARCH
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DUPLICATE KEY DETECTION SEARCH
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DUPLICATE KEY DETECTION SEARCHCheck for related companies
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DUPLICATE KEY DETECTION SEARCHPotential related companies
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DUPLICATE KEY EXCLUSION SEARCHTo extract out same name vendors
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DUPLICATE KEY EXCLUSION SEARCHTo extract out same name vendors
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DUPLICATE KEY EXCLUSION SEARCHFinal results before manual review for “false positives”
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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
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DETECT & PREVENT PROCUREMENT FRAUD WITH DATA ANALYSIS
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