Question

Accounting Fraud Investigation and Prevention:

please Research the accounting/fraud/forensic field regarding accounting fraud investigation or prevention. What innovative technologies or procedures are helpful in detecting and preventing accounting and financial fraud? I would really like to understand the subject better.

Answer 1

What innovative technologies or procedures are helpful in detecting and preventing accounting and financial fraud?

Detection and prevention of accounting and financial fraud through innovative technologies like Big Data and Machine Learning are a must have to detect fraudulent activities in a data centric world.

The Big Data revolution has added variety to the information that can be fed to fraud-detection algorithms in addition to numerical and financial statement data; it includes texts, social media content, conference reports, interviews and other types of unstructured data. Hire data scientists who can analyze the data at macro and micro level revealing potential loop holes

The exponential increase in online transactions has made payment processing a fertile ground for perpetrating fraud. Credit card transactions and automated clearing house (ACH) transactions have been very prone to misappropriation of assets, often carried out via phishing or malware attacks. ACH fraud can be abetted by inadequate internal blocks, a lack of filters and multiple authorizations.

Machine learning models are already used in credit card authorization to identify potentially fraudulent transactions in real time. This is typically done by scoring a transaction based on the trustworthiness of the vendor and the cardholder’s purchasing behavior, as well as time and location data. The number of false alarms, while substantial in the initial phase, can be slowly narrowed down as more data comes online and more-robust profiles of cardholders are created.

The Beneish M-score and Dechow F-score models investigate the likely sources of aggressive accounting choices, while Benford’s law and Zipf’s law look into the natural distributions of numbers and words (see Figure 5). By using these approaches together, an investor can build safeguards against potential manipulators.