Question

What kind of fraud schemes can I detect from the tests below?

1) Appending a field

2) Benford's Law

3) Direct Extraction

4) Duplicate Key Detection

5) Duplicate Key Exclusion

6) Gap Detection

7) Stratification

8) Summarization

9) Supplier Verification

Answer 1

1) Appending a field can detect payroll fraud. It involves ghost payrolling.

2)Benford’s Law are highly effective in finding inconsistent data and anomalies. This Law states that digits and digit sequences in a dataset follow a predictable pattern. It can identify possible errors, potential fraud and other irregularities on applying to a digital analysis.

3) Direct Extraction can be used in user-defined criteria to isolate paychecks that did not have taxes withheld, or analyze addresses to help uncover ghost employee schemes.By cross matching a list of existing employees with payroll records, payroll errors can be found out.

4) Duplicate key detection can be used to find records with or without duplicates in one field or up to eight fields.

5) Duplicate key exclusion helps in identifying duplicate items within a database, or gaps in dates, numeric or alphanumeric sequences. In addition, to extract payments with missing invoice numbers or approval IDs, simple equations can be written with its help. It helps to detect extra payments made of invalid invoice.

6) Gap detection can detect accounts receivable fraud.

7)Stratification can be performed with the help of number, character or date to total the number and value of records within each range in order to identify and review activities just under a group, just before the closing period or after it. It helps to look for transactions posted on weekends, or before or after normal work hours. It can detect fraudulent transactions.

8)Summarization involves accumulating the values of numeric fields for each unique key, such as supplier name, part number, location ID, or approver ID. Summarization of an accounts payable database by account number (the key) and totalling invoice amounts produces a database of outstanding liabilities by supplier. It can detect Accounts payable fraud.

9)Supplier verification helps to detect vendor fraud in which the fraudster manipulates a company’s accounts payable and payment systems for illegal personal monetary gain.