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2007
The Weakest Link
in Information Security
November 2007: Businesses spend a
significant portion of their annual information technology budgets
on high-tech computer security. But the firewalls, vaults, bunkers,
locks and biometrics those dollars buy can be pierced by attackers
targeting untrained, uninformed or unmonitored users. (Read
more...)
Video
Surveillance in the Fight Against Bank Fraud
SEPTEMBER 2007: Fraud and other
illegal activities are cause for major concern at all banks, and
Israel's Bank Hapoalim is no exception. Identity theft and
on-premises holdups are some of the more prominent crimes that come
to mind when we think about threats, but smaller petty crimes often
are more common and can have a surprisingly significant impact not
only on a bank's bottom line but on its reputation as well. (Read
more...)
A
Risk-Based Approach to Journal Entry Testing
JULY 2007: How software can help
auditors detect fraud
An effective system
of internal control will help prevent material misstatements,
whether due to error or fraud, from occurring in a company’s
financial statements. Much recent work has gone into ensuring that
controls are in place, documented and tested to provide evidence
that they are designed and operating effectively. However, all this
work is for naught if employees are able to circumvent the control
structure. A recent study by the Association of Certified Fraud
Examiners (ACFE) documented the limitations of internal controls
for fraud detection when it found that internal controls were not
the first but the fourth most common way to detect fraud. (Read
more...)
Flexing Your
Super Financial Sleuth Power
JUNE 2007: Worldwide fraud
is on the rise. The magnitude of the problem prompted the AICPA and
the Association of Certified Fraud Examiners to create the
Institute for Fraud Prevention. To assist in detecting fraud,
auditors need to employ innovative techniques like Benford’s law,
which predicts the frequency of digits 1 through 9 in the first
four places of any number. (Read
more...)
Technology's Role in Accounts Payable Fraud Prevention
June 2007:
Without a doubt technology plays a huge role in preventing accounts
payable fraud. Technology and automation take the slack out of
manual processing, making it possible for an invoice to be
processed in a fraction of the time. Not only does automation
increase throughput, but it makes it more difficult for crooks, who
rely on inefficient processes, to sneak fraudulent invoices
through. (Read
more...)
Continuous Fraud Monitoring: A Real-Time Solution to a Real
Problem?
JUNE 2007:
Imagine
how valuable your advice would be if you could save clients the 5
percent of their annual revenue that is now leaking unseen out of
their organization, reduce their Sarbanes-Oxley compliance costs
and enhance the reliability of their financial reports. That’s the
promise of the latest information technology-driven business
process, Continuous Fraud Monitoring (CFM).
In this article,
posted with permission from Consulting magazine, Tom Aleman and
Samir Hans, a principal and senior manager, respectively, in the Analytic
& Forensic Technology practice of Deloitte Financial Advisory
Services LLP, discuss how organizations with high transaction
volume may be able to use CFM to identify fraud proactively and
slash the time between when fraud is committed and when it is
detected, with a view to improving their accounting processes and
enhancing the integrity of their financial reports. (Read
more...)
Continuous fraud control
APRIL
2007: With five per cent of turnover being lost every
year to fraud1,
it is no surprise that today’s enterprises are particularly keen to
implement both tighter strategies and new technologies that aim to
reduce revenue leakage. But viewed in a wider organisational
context, can fraud prevention be much more than simply curbing an
unnecessary loss of funds?
The short answer, I believe, is ‘yes’. Reducing
financial risk can have a very clear impact on corporate
governance, and here’s my argument. (Read
more...)
How retailers can get the most from forensic data analysis
JANUARY 2007:
Properly designed and deployed, forensic data analysis is a powerful,
practical tool to address fraud and misconduct in retail enterprises of all
kinds and sizes. (Read
more...)
2006
Click...and the Database
Loads Into Excel
SEPTEMBER 2006: If you’re like most CPAs, you’re more
proficient with an Excel spreadsheet than a database. So when you’re faced
with the challenge of analyzing database information, you probably
reluctantly bite the bullet and go through the tortuous steps of converting
and importing it into Excel. Say good-bye to all that. We’ll show you how to
do the whole job with just a single mouse click. (Read
more...)
Data Mining 101: Tools and Techniques
AUGUST 2006:
Understanding the advantages of using different data mining tools
and techniques — and knowing what data mining does — can help
beginner auditors provide recommendations that improve business
processes and discover fraud.
Most
internal auditors, especially those working in customer-focused
industries, are aware of data mining and what it can do for an
organization — reduce the cost of acquiring new customers and
improve the sales rate of new products and services. However,
whether you are a beginner internal auditor or a seasoned veteran
looking for a refresher, gaining a clear understanding of what data
mining does and the different data mining tools and techniques
available for use can improve audit activities and business
operations across the board. ( Read
more...)
2005
Fraud and artificial
intelligence: new machine-learning technology may help
businesses detect suspicious activity and mitigate the risk of
fraudulent transactions
FEBRUARY
2005: COMPUTER AUDIT TOOLS HAVE been used for years to detect and
investigate fraudulent behavior, but can technology enable auditors
to stop fraud before it actually takes place? It might sound like
science fiction, but a UK start-up company says its tools, based on
artificial intelligence techniques, can do just that. (Read
more...)
Digging for golden evidence
Data mining: a tool
for all fraud examiners
Business or nonprofit
databases can be minimal in size or grow to several terabytes. Any of these
data sources may hold hidden yet vital information you may be seeking during
a fraud examination. No matter your background you can become skilled at
data mining. In fact, it''s no longer an optional skill set.
Data mining has also been
called database reporting, data analysis, and other similar names but
generally can be defined as "the automated extraction of hidden predictive
information from databases." The tools discussed here will assist with
automated extraction. (Read
more...)
Setting a Process To Proactively Detect Fraud Using Technology
2005: Fraud is an elusive enemy in that it is a human nature issue.
Therefore, as quickly we can build a person-trap to catch a
particular fraudster, just as quickly will the person find a new
means to extract funds from a company. While this may be a
defeatist attitude, I consider it more of a realistic situation
assessment. Also, by admitting that technology alone
will not stop fraud, it begins us down the
road to better detecting it at organizations. Technology needs to
be paired with the human mind to make a new form, a bionic one,
that stands the best chance to detecting fraud in organizations. (Read
more...)
2004
Data mining, "The DNA of a forensic accountant"
2004: Every organization employs a fraudster performing his devious deeds as you
are reading this article. Even in those companies where the management
believes their organization to be "99 and 44/100 % pure", just like the old
Ivory Soap commercials, this still means that for an organization with 1,000
employees, there are at least five of them running around trying to wreck
the company. Most would agree – that's five people too many. Fortunately,
there is an efficient mechanism to both detect and deter fraud which is the
subject of this article… Data Mining. (Read
more...)
2004: While occupational fraud
takes various forms, the result is always the same: the numbers generated by
fraud cannot hold up to the unfailing logic of the accounting equation. If
executives add false sales and accounts receivable to increase the
organization's revenue, profits and cash will be out of kilter. The
advancement of technology has allowed for this "accounting equation" to be
systematized into computer logic and applied to company data.1
Results of this logic could take the form of a simple matching of the human
resource file to the accounts payable vendor master file. On the other side
of the coin, it could be an advanced neural network application focused on
detecting money laundering schemes. (Read
more...)
2003
Back from the shred
NOVEMBER 2003: The term "shred of evidence" may
soon take on a new meaning for forensic accountants. That's because
Houston-based ChurchStreet Technology has developed a method of
reconstructing shredded documents electronically, offering a
speedier alternative to the laborious task of searching, matching
and pasting strips manually. (Read
more...)
Using Software to Sniff Out Fraud
SEPTEMBER 2003: In the 1920s, Frank
Benford, a physicist at General Electric (GE), discovered an astonishing
mathematical law: In just about any given set of numerical data, numbers
occur as the first or second digit at a predictable rate. For example, "1"
will appear as the first digit 31% of the time, but "9" will appear first
only 5%. While that sounds unlikely, Benford tested lists of numbers from
many different sources -- accounting ledgers, geographic data, even magazine
articles -- and found that the same probability persisted.
Applied to accounting,
Benford's Law makes for a great way to check to see if numbers are
fabricated (since when liars make up figures, they usually don't follow the
same statistical pattern Benford identified). The law is now enjoying
booming popularity as the basis for a fairly easy, routine test that's used
to uncover accounting fraud. Easy, that is, if you have a sophisticated
software package and enough high-powered computers to crunch numbers from
reams of documents. (Read
more...)
Turn Excel Into a Financial
Sleuth
AUGUST 2003: One of our small business clients—we’ll
call him Bob—recently expanded his one-store, family-run retail operation
into a four-store chain. As many small business owners have to do, Bob had
to relinquish some hands-on control when his business grew. He had to hire
new employees for each store, and he worried about the possibility of
bookkeeping errors and, even worse, fraud.
We suggested running a digital-analysis process based on
Benford’s Law, which can detect irregularities in large data sets. We told
Bob he didn’t need to buy any special software to use the process, and that
with a few modifications, Excel could do the job.
(Read
more...)
The brain gain
Advanced knowledge-based systems can be a valuable
weapon in the fight against fraud
AUGUST 2003: Forensic accountants and auditors
no longer have to rely solely on their own experience to detect
fraud or internal control weaknesses. Huge strides have been made
over the past decade in advanced knowledge-based systems (KBS),
which use data mining to unearth patterns and trends that might
otherwise escape detection. In that way, they can contribute to
an organization's overall risk management strategy. (Read
more...)
Incident response and fraud investigation – the role of the
information technology auditor
MAY
2003: Information systems can both facilitate and detect fraud. The
increasing accessibility of information systems to employees,
business partners and customers, from both inside and outside the
organization, heightens the vulnerability of the systems to attack
and the potential for theft or misuse of confidential data.
All IT-related frauds start as an IT incident, which is an IT
event that disrupts the day-to-day IT processing. Incident response
is the first step: determine what happened, decide what to do about
it and determine whether the incident is fraud related. If so, the
next step involves computer forensics: the means by which an
incident investigator retrieves and assembles evidence about a
computer crime. This article discusses incident response issues and
then provides detailed guidance on the role of information
technology in fraud response, investigation, analysis, and
prevention. ( Read
more...)
MARCH 2003: There are
several software programs that can help you provide the added
assurance demanded by officers and directors
The Sarbanes-Oxley Act, which is mirrored in Canada with the
CICA's proposed new independence rules, has changed the way we
practise.
"To protect investors by improving the accuracy
and reliability of corporate disclosures"
The Sarbanes-Oxley Act of 2002
Top executive responsibility has been increased. The audit
committee and board of directors are demanding more assurance from
the internal auditor, external auditor and accounting department.
Moreover, new restrictions have been placed on external auditors
of publicly listed companies, which leave the internal auditors and
accountants to fend for themselves. How do you respond?
Fortunately, there are several easy-to-use software programs
that can greatly assist in providing the added assurance demanded
by officers and directors, not to mention shareholders. (Read
more...)
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