Fraud Detection and Prevention Techniques Using Excel

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Webinar series from FraudResourceNet LLC on Preventing and Detecting Fraud Using Data Analytics. Recordings of these Webinars are available for purchase from our Website fraudresourcenet.com …

Webinar series from FraudResourceNet LLC on Preventing and Detecting Fraud Using Data Analytics. Recordings of these Webinars are available for purchase from our Website fraudresourcenet.com
This Webinar focused on fraud detection using data analytic software (Excel, ACL, IDEA)
FraudResourceNet (FRN) is the only searchable portal of practical, expert fraud prevention, detection and audit information on the Web.
FRN combines the high quality, authoritative anti-fraud and audit content from the leading providers, AuditNet ® LLC and White-Collar Crime 101 LLC/FraudAware.
The two entities designed FRN as the “go-to”, easy-to-use source of “how-to” fraud prevention, detection, audit and investigation templates, guidelines, policies, training programs (recorded no CPE and live with CPE) and articles from leading subject matter experts.
FRN is a continuously expanding and improving resource, offering auditors, fraud examiners, controllers, investigators and accountants a content-rich source of cutting-edge anti-fraud tools and techniques they will want to refer to again and again.

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  • 1. "Fraud Detection and Prevention Techniques Using Excel" May 8, 2013 Special Guest Panelist: Charlie Walker Reinvent Data Limited Copyright © 2013 FraudResourceNet LLC About Peter Goldmann, MSc., CFE  President and Founder of White Collar Crime 101  Publisher of White-Collar Crime Fighter  Developer of FraudAware® anti-fraud training courses  Monthly columnist, The Fraud Examiner, ACFE Newsletter  Member of Editorial Advisory Board, ACFE  Author of Fraud in the Markets, published by Wiley; available at Amazon.com) Copyright © 2013 FraudResourceNet LLC
  • 2. About Jim Kaplan, CIA, CFE  President and Founder of AuditNet®, the global resource for auditors  Auditor, Author, Web Site Guru, Internet for Auditors Pioneer  Recipient of the IIA’s 2007 Bradford Cadmus Memorial Award. Copyright © 2013 FraudResourceNet LLC Charlie Walker  Managing Director at Reinvent Data Limited  Chartered Accountant and Excel expert  Creator of TopCAATs, an Excel based CAATs package  Author of “The Ultimate Guide to Auditing with Excel” Copyright © 2013 FraudResourceNet LLC
  • 3. Webinar Housekeeping This webinar and its material are the property of FraudResouceNet LLC. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden. We will be recording the webinar and you will be provided access to that recording within five business days after the webinar. Downloading or otherwise duplicating the webinar recording is expressly prohibited. Please complete the evaluation to help us continuously improve our Webinars. Unless you are part of a group viewing this webinar on a single screen, you must answer ALL the polling questions to qualify for CPE per NASBA. Submit questions via the chat box on your screen and we will answer them either during or at the conclusion. If GTW stops working you may need to close and restart. You can always dial in and listen and follow along with the handout. Copyright © 2013 FraudResourceNet LLC Disclaimers  The views expressed by the presenters do not necessarily represent the views, positions, or opinions of FraudResourceNet LLC (FRN) or the presenters’ respective organizations. These materials, and the oral presentation accompanying them, are for educational purposes only and do not constitute accounting or legal advice or create an accountant-client relationship. While FRN makes every effort to ensure information is accurate and complete, FRN makes no representations, guarantees, or warranties as to the accuracy or completeness of the information provided via this presentation. FRN specifically disclaims all liability for any claims or damages that may result from the information contained in this presentation, including any websites maintained by third parties and linked to the FRN website Any mention of commercial products is for information only; it does not imply recommendation or endorsement by FraudResourceNet LLC Copyright © 2013 FraudResourceNet LLC 5
  • 4. Today’s Agenda      Introduction Fraud Statistics Auditor’s Role in Fraud Detection Principles of Data Analytics Why Excel Getting Started (including 30 tests to try out)  Going Forward  Questions & Answers Copyright © 2013 FraudResourceNet LLC Fraud: The Big Picture According to major accounting firms, professional fraud examiners and law enforcement:  Fraud costs the world $3.5 TRILLION per year. (5%) (ACFE)  Business losses due to fraud increased 20% in last 12 months, from $1.4 million to $1.7 million per billion dollars of sales. (Kroll 2010/2011 Global Fraud Report)  75% of the companies surveyed experienced at least one incident of fraud in the last 12 months (KPMG)  Average cost for each incident of fraud is $160K (ACFE)  Skimming is 4th most common internal fraud; $60K per incident  Larceny is 5th most common internal fraud; $100K per incident  Approximately 60% of corporate fraud committed by insiders (PwC) Copyright © 2013 FraudResourceNet LLC
  • 5. The Auditor’s Role IPPF Standard 1210.A3  Internal auditors must have sufficient knowledge of…available technology based audit techniques to perform their assigned work Copyright © 2013 FraudResourceNet LLC IIA Guidance – GTAG 13 Internal auditors require appropriate skills and should use available technological tools to help them maintain a successful fraud management program that covers prevention, detection, and investigation. As such, all audit professionals — not just IT audit specialists — are expected to be increasingly proficient in areas such as data analysis and the use of technology to help them meet the demands of the job. Copyright © 2013 FraudResourceNet LLC
  • 6. Professional Guidance Copyright © 2013 FraudResourceNet LLC Principles of Data Analytics to Detect Fraud  Using set rules to identify transactions of higher risk  Every company is different, has a different environment, different systems, different risks, etc.  Need to use judgment to select testing  Need to use judgment to evaluate results  Just because a transaction matches a red flag doesn’t mean fraud is present  Using data analytics does not guarantee finding fraud or finding all fraud! Copyright © 2013 FraudResourceNet LLC
  • 7. Why Excel  You’ve already got it installed  You’re already using it on a daily basis  It’s easy to get started with the basics  There’s a huge amount you can do as your skills develop  Skills learned here can be carried forward Copyright © 2013 FraudResourceNet LLC Polling Question 1 Copyright © 2013 FraudResourceNet LLC
  • 8. Limitations of Excel     Requires manual formula entry Often many steps involved Restricted file sizes Not really designed for this type of work Copyright © 2013 FraudResourceNet LLC Key Excel Features  AutoFilters  Pivot Tables  IF Formulas  VLookUp Copyright © 2013 FraudResourceNet LLC
  • 9. Getting Started  Start with the easy stuff – no point trying to run before you can walk!  Have a well thought out plan  Invest time in getting the right data in the right format  Remember to save regularly  Just do it – what’s the worst that can happen? Copyright © 2013 FraudResourceNet LLC Polling Question 2 Copyright © 2013 FraudResourceNet LLC
  • 10. The Data Analytics Cycle Plan your testing Request Data Review Continual Learning Evaluate and Follow up Obtain and Clean Data Carry out testing Copyright © 2013 FraudResourceNet LLC Getting the data  Speak to IT departments not just process owners  Flat files (e.g. “.csv”) are best  Be specific– the more information you can provide the better Copyright © 2013 FraudResourceNet LLC
  • 11. Accounts Payable Testing           Duplicate Vendors Vendor – Employee Relationships Split transactions Transactions posted on unusual days/dates/times Invoice date before purchase order date Rounded transactions Potential Related Parties Reversing changes to standing data Benford’s Testing Summarize transactions by user Copyright © 2013 FraudResourceNet LLC Polling Question 3 Copyright © 2013 FraudResourceNet LLC
  • 12. PCards and TCards           Transactions at foreign merchants Split transactions Purchases on weekends/holidays Multiple cards per cardholder Inappropriate vendor transactions Top Cost Centers/Card Holders Monthly limit exceeded Duplicate Claims Transactions just below authorization limits Round Amounts Copyright © 2013 FraudResourceNet LLC Payroll Testing           Duplicate or “ghost” employees Duplicate payments Excessive payments Employees paid after termination Unauthorized overtime Leave never taken Non Consecutive leave Only person working overtime Still in work not claiming overtime Cancelled and re-issued checks Copyright © 2013 FraudResourceNet LLC
  • 13. Polling Question 4 Copyright © 2013 FraudResourceNet LLC Going Forward       Build up a regular “Test set” Don’t be afraid to experiment Share ideas Internally – resource library, regular meetings Externally – forums, webinars, LinkedIn Upgrade from Excel to dedicated CAATs software – many of your skills will be transferable Copyright © 2013 FraudResourceNet LLC
  • 14. TopCAATs  Suite of over 130 tools for Auditors and Accountants  Runs completely within Excel  Mixture of data analytics and Excel productivity tools  Allows wider variety of work/testing and greatly improves efficiency Copyright © 2013 FraudResourceNet LLC Polling Question 5 Copyright © 2013 FraudResourceNet LLC
  • 15. 10 Excel Resources for Auditors 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Auditing with Excel book – www.auditingwithexcel.com/auditnet Evaluating CAATs report – www.topcaats.com/auditnet TopCAATs – www.topcaats.com ActiveData for Excel http://www.mrexcel.com/auditors.shtml Using Excel as an Audit Software available eBook from AuditNet Using Excel to Detect Fraud (e-book). Excel for Auditors by Bill Jelen Fraud Detection with ActiveData For Excel Using Excel to Ferret Out Fraud Find Financial Fraud Using Benford’s Law Copyright © 2013 FraudResourceNet LLC Questions?  Any Questions? Don’t be Shy! Copyright © 2013 FraudResourceNet LLC
  • 16. AuditNet® Survey 2013 Fraud Detection Techniques Using Technology Please help us by taking the survey Scan the QR Code with your Mobile Device Or Visit https://www.surveymonkey.com/s/Z6XZ8DW Copyright © 2013 FraudResourceNet LLC Coming Soon…  “Fraudulent Documentation: Fraudsters’ Secret Weapon ... How to Disarm Them”, May 29 “An Expert’s Advice on Establishing an Organization Wide Fraud Policy”, June 5 Copyright © 2013 FraudResourceNet LLC
  • 17. Thank You! Website: http://www.fraudresourcenet.com Jim Kaplan FraudResourceNet™ 800-385-1625 jkaplan@fraudresourcenet.com Peter Goldmann FraudResourceNet™ 800-440-2261 pgoldmann@fraudresourcenet.com Charlie Walker, ACA Reinvent Data Limited www.reinventdata.com Charlie.walker@reinventdata.com Copyright © 2013 FraudResourceNet LLC