Fraud Analytics E-Book

Delena D. Spann

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Corporate F&A
• Sprache: Englisch

Seitenzahl: 210

Veröffentlichungsjahr: 2014

Beschreibung

Proven guidance for expertly using analytics in fraud examinations, financial analysis, auditing and fraud prevention Fraud Analytics thoroughly reveals the elements of analysis that are used in today's fraud examinations, fraud investigations, and financial crime investigations. This valuable resource reviews the types of analysis that should be considered prior to beginning an investigation and explains how to optimally use data mining techniques to detect fraud. Packed with examples and sample cases illustrating pertinent concepts in practice, this book also explores the two major data analytics providers: ACL and IDEA. * Looks at elements of analysis used in today's fraud examinations * Reveals how to use data mining (fraud analytic) techniques to detect fraud * Examines ACL and IDEA as indispensable tools for fraud detection * Includes an abundance of sample cases and examples Written by Delena D Spann, Board of Regent (Emeritus) for the Association of Certified Fraud Examiners (ACFE), who currently serves as Advisory Board Member of the Association of Certified Fraud Examiners, Board Member of the Education Task Force of the Association of Certified Anti-Money Laundering Specialists ASIS International (Economic Crime Council) and Advisory Board Member of the Robert Morris University (School of Business), Fraud Analytics equips you with authoritative fraud analysis techniques you can put to use right away.

Leseprobe

Contents

Cover

Series Page

Title Page

Copyright

Dedication

Foreword

Preface

Acknowledgments

Chapter One: The Schematics of Fraud and Fraud Analytics

How do we Define Fraud Analytics?

Mining the Field: Fraud Analytics in its New Phase

How do we Use Fraud Analytics?

Fraud Detection

How do we Define Fraud Analytics?

Fraud Analytics Refined

Notes

Chapter Two: The Evolution of Fraud Analytics

Why Use Fraud Analytics?

The Evolution Continues

Fraud Prevention and Detection in Fraud Analytics

Incentives, Pressures, and Opportunities

Notes

Chapter Three: The Analytical Process and the Fraud Analytical Approach

The Turn of the Analytical Wheel

IT Takes More Than One Step

Probabilities of Fraud and Where it all Begins

What Should the Fraud Analytics Process Look Like?

Data Analytics Exposed

Notes

Chapter Four: Using ACL Analytics in the Face of Excel

The Devil Remains in the Details

Notes

Chapter Five: Fraud Analytics versus Predictive Analytics

Overview of Fraud Analysis and Predictive Analysis

Comparing and Contrasting Methodologies

13 Step Score Development versus Fraud Analysis

CRISP-DM versus Fraud Data Analysis

SAS/SEMMA versus Fraud Data Analysis

Conflicts Within Methodologies

Composite Methodology

Comparing and Contrasting Predictive Modeling and Data Analysis

Notes

Chapter Six: CaseWare IDEA Data Analysis Software

Detecting Fraud With Idea

Fraud Analysis Points of Idea

Correlation, Trend Analysis, and Time Series Analysis

What is Idea's Purpose?

A Simple Scheme: The Purchase Fraud of an Employee as a Vendor

Stages of Using IDEA

Notes

Chapter Seven: Centrifuge Analytics: Is Big Data Enough?

Sophisticated Link Analysis

The Challenge with Anti-Counterfeiting

Interactive Analytics: The Centrifuge Way

Fraud Analysis with Centrifuge VNA

The Fraud Management Process

Notes

Chapter Eight: i2 Analyst's Notebook: The Best in Fraud Solutions

Rapid Investigation of Fraud and Fraudsters

i2 Analyst's Notebook

i2 Analyst's Notebook and Fraud Analytics

How to Use i2 Analyst's Notebook: Fraud Financial Analytics

Using i2 Analyst's Notebook in a Money-Laundering Scenario

Notes

Chapter Nine: The Power to Know Big Data: SAS Visual Analytics and Actionable Intelligence Technologies' Financial Investigative Software

The SAS Way

Actionable Intelligence Technologies' Financial Investigative Software

A Case in Point

Notes

Chapter Ten: New Trends in Fraud Analytics and Tools

The Many Faces of Fraud Analytics

The Paper Chase is Over

To Be or Not to Be

Raytheon's Visualinks

Fico Insurance Fraud Manager 3.3

IBM i2 iBase

Palantir Tech

Fiserv's AML Manager

Notes

About the Author

Index

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Library of Congress Cataloging-in-Publication Data:

Spann, Delena D., 1967-

Fraud analytics: strategies and methods for detection and prevention/Delena D. Spann.

pages cm. – (The Wiley corporate F & A)

ISBN 978-1-118-23068-8 (hardback) – ISBN 978-1-118-28699-9 (ePDF) – ISBN 978-1-118-28273-1 (ePub) 1. Fraud. 2. Fraud investigation. 3. Fraud–Prevention. I. Title.

HV8079.F7S68 2013

658.4′73–dc23

2013019909

To my dad and mom, Peter and Retha Cook Spann, the givers of my life, who both love me just as much as I love myself and to the great cloud of witnesses who keep watch over me

Foreword

My first job as a newly minted accounting graduate was—no surprise here—as an auditor. I worked for a top accounting firm that was one of the “Big Eight” at the time. This was the 1970s, when accountants kept a set of books on manual ledgers using pencil and paper. I found my job as an auditor to be excruciatingly repetitive. Most of the work, I wryly observed, could be done by a trained monkey: adding columns of figures, reconciling bank statements and observing inventory counts. Back then, auditors spent their time looking for careless errors made by bookkeepers rather than conducting any sort of sophisticated analysis. The term “data analytics” wasn't even in the vernacular at that time.

Fortunately, long gone are the days of most manual accounting records. In modern electronic ledger systems, ending balances are automatically rolled forward to start the next year; accruals are programmed to occur monthly; and error messages alert you if a journal entry fails to balance. Columns can be totaled instantly and accurately with the click of a button. Auditors' and investigators' time is now spent doing work that actually involves critical thinking.

The digitization of data has made business systems more complex, robust and dynamic. Companies are no longer limited in the amount of numbers they can generate or store. In addition to accounting transactions, information technology systems house research and development, marketing, communication and human resources files. All of this composes what is referred to as “big data,” which represents the continuous expansion of data sets—the size, variety and speed of generation of which makes it difficult to manage and analyze.

With its ever-increasing size, data analytics have never been more important or useful to a fraud examiner. There are more places for fraud to hide and more opportunities for fraudsters to conceal it. Due to its size and complexity, big data requires the use of creative and well-planned analytics. One of the main advantages of big data environments is that they allow a fraud examiner to analyze an entire population of information rather than having to choose a sample and risk drawing incorrect conclusions in the event of sampling error. Finding fraud in a list of a million transactions is no longer impossible.

To conduct an effective financial analysis, a fraud examiner must take a comprehensive approach. Any direction can (and should) be taken when applying analytical tests. Big data affords fraudsters more opportunities to commit increasingly clever and surreptitious crimes. The more creative fraudsters get in hiding their misdeeds, the more creative the fraud examiner must become in analyzing data to detect these schemes.

Performing fraud analysis techniques, including the necessary data extraction and cleansing, requires a combination of fraud examination methodology and technological savvy. If you are looking to develop these skills, a good start is Delena Spann's Fraud Analytics. Using statistics from the Association of Certified Fraud Examiners' 2012 Report to the Nations on Occupational Fraud and Abuse, Ms. Spann illuminates the devastating impact of fraud on organizations, emphasizing the importance of using the most advanced detection techniques available. Ms. Spann explains why it is imperative that fraud investigators employ data analytics in their efforts to prevent and detect fraud. She then guides the reader through the fundamental data analysis process, from data identification and collection to analysis and insight. Finally, she introduces several popular software programs useful to fraud examiners without endorsing any particular product.

Ms. Spann, using the knowledge she has gained in her experience in the Electronic and Financial Crimes Task Force of the United States Secret Service, provides guidance to fraud examiners looking to incorporate data analysis into their practices. By providing illustrative examples of how to use different software (without commercial endorsement) in real-life fraud case studies, Ms. Spann elucidates the practice of fraud analytics, making it approachable to her readers. Fraud Analytics doesn't purport to have all of the answers, but it is a good start to any anti-fraud professional's library.

Dr. Joseph T. Wells, CFE, CPA

Founder and Chairman, Association of Certified

Fraud Examiners

Austin, Texas

October 2013

Preface

Herein lies my first published book. I have written many pages on a topic that has become a passion for me—fraud analytics. As I reflect, I wonder how and when I became so interested in a topic that is so prevalent in the twenty-first century. It all began some years ago when I had the opportunity to assist on a large-scale financial crimes investigation.

Fraud Analytics was compiled as a mere thought; however, that mere thought would not leave me alone and I knew I had to share my expertise in fraud and analysis on a greater platform. When I recalled the complexities of raw data that I had seen throughout the years, it became crystal clear that more technology was available, but I had to conduct my research to find what tools would suffice. I had to understand what I lectured on and presented to audiences who were interested in taking fraud analytics to the next level; it was a growing and sought-after technique within the fraud industry

Throughout my research, I used tools to detect fraudulent transactions through monitoring, tools that could join and merge data fields and scripts, and tools that provided link analysis association between persons and commodities. Along the way, I experienced challenges when using and understanding the different types of methodologies for each tool. My reading enhanced the use of each tool by expanding not only my knowledge but also the concept that there were more ways to establish the needed results in fraud detection and prevention.

At times I felt that the research was overwhelming, and indeed it was. I researched and wrote on weekdays, weekends, late at night, in my sleep; it was a daunting and tireless task. However, my desire could no longer be hidden—I had to explain fraud analytics in the only way that I knew how: by examples and case studies.

Writing Fraud Analytics has changed my way of thinking and broadened my ability to try new and diverse tools. I am no longer skeptical, and my hope is that when you turn the pages, your skepticism will subside and you will begin to explore the tools that are discussed.

This book is written for those who want a better understanding of fraud analytics and new ways of conducting analysis with available fraud tool kits. It is written for the private sector, academia, and law enforcement. Fraud analytics is needed by all and should be embraced. The world has changed; Technology has come a long way, and so has the way we do business in fraud analytics.

Acknowledgments

Writing a book has been one of my long-awaited dreams. At one time in my life I had hoped to be a lawyer or journalist. I have journaled for several years and continue to do so in my spare time. When the opportunity came along to write a book on fraud analytics, I was elated that there was an interest and decided to accept the offer from Wiley.

For those who have supported my work throughout the duration of writing in addition to being an integral part of my personal and professional endeavors, I send a heartfelt thank you to all.

For my dad and mom, Peter and Retha Spann: Thank you both for teaching me to stand up for those things in which I believe and to never compromise my values, morals, or integrity.

My sincere appreciation to my extended family of the Association of Certified Fraud Examiners (ACFE) and the opportunities they have afforded me. It has been my honor to be a part of this exceptional team, including Dr. Joseph Wells, Jim Ratley, Jeannette Levie, Angela Archie, Leslie Simpson, Jeff Kubiszyn, John Gill, John Warren, Bruce Dorris, Jan Orr, John Loftis, Joey Broccolo and Dick Carozza, and the other superstars of the ACFE. The ACFE rocks!

To the esteemed board of directors of the Association of Certified Fraud Examiners of the Greater Chicago chapter I have been most honored to serve with: David S. Marshall, Peg Berezewski, Susan L. Henry, Paul Bilotta, Deanna J. Wilner, Jim Scordo, Richard Beaulieu, and Rebecca S. Busch.

To the honorable Board of Regents of the ACFE whom I was elated to serve with: Richard F. Woodford, George F. Farragher, Martha Reynolds McVeigh, Jonathan Turner, Peter R. Callaway, and Bert F. Lactivo.

As I began writing this book, I had no clue about which direction I would go or should take. However, my executive editor, Tim Burgard, and development editor, Stacey Rivera, of John Wiley & Sons, shared with me the process of writing a book and the steps at each juncture with direction, guidance, and patience, and they encouraged me to press forward. Their critiques meant the world to me, and I will be forever grateful for all that they have done to bring this book to fruition. I am also grateful to the best in the business—Debra Manette, editor and expert in her own right, Helen Cho for taking the helm in the second phase, Natasha Andrews, for her diligence and for helping me to understand the meaning of deadlines. You have all made this a tremendous learning experience for me.

A special note of thanks to the best mentors who have taught me the meaning of perseverance and resilience: Dr. Jeffrey D. Swain, J.D., Ph.D,; Mr. Reginald “Ray” Moore; and Judge Kenneth L. Gillespie, JD, LLM. To those of you who took the time out of your immensely busy schedules to read a portion of the manuscript draft and endorse my first book, your kindness shall never be forgotten: Jill D. Rhodes, JD, LLM, Peg Berezewski; MBA, MS, CPA, CFE; David S Marshall, MBA, CISA, CFE, CFS; and Dr. Jeffrey D Swain, JD, PhD.

Although the concepts and perspectives in this book are mine solely and not the views or opinions of the United States Secret Service, I thank my employer and all those in senior-level management for supporting me in writing this book.

To the world of academia and higher education, thank you so much for allowing me the opportunity to teach and share through practicum and theory what I am most passionate about: fraud analytics.

Without reservation, I would never have been able to do all that I have done without the favor of the creator of creation and the governor of all nations (the Almighty God) who continues to guide me with strength and makes my way perfect. I exalt thee.