01/26/2012 Meeting - Fraud Detection and Prevention Through Data Analysis
1. Fraud Detection and Prevention
through Data Analysis
Presented by:
Greg Taylor, CFE
Senior Vice President/CTO
Corporate Audit Partners
2. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Agenda
Introduction
Defalcation Statistics
Case Studies
Fictitious Invoices
Duplicate Payments
Budget Manipulation
Prevention and Detection
Dry Run Test
Consecutive Invoice Numbering
Non-Sequential Invoice Numbers
Vendor Histogram
PO Box Only Addresses
Address Analysis
Bank Code Analysis
Benford's Law
Number Duplication
3. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Introduction
Greg Taylor
24 years of accounting and auditing
Industries
Banking
Aerospace
Advertising
Owned Forensic Accounting Business
14th year in the recovery auditing industry
Published author – Please review Corporate Audit Partners website www.corporateaudits.com to
review two articles. “Why Employees Steal” and “Fraud Basics, The Perils of a Small Business”.
White paper – University of Arizona, Eller College of Management, “How to Lose $1.8 Billion in One
Week - Seven Ways to Protect Your Information from Security Loss”
http://iasec.eller.arizona.edu/white_papers/index.asp
4. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Occupational Fraud Statistics
Association of Certified Fraud Examiners 2010 Report
1,843 cases totaling approximately $1 billion in losses
Est. typical U.S. organizations loses 5% of revenue to fraud
Confidential Reporting mechanisms reduce fraud losses by 50% (tip line)
Fraud losses are disproportionably large in small business
80% of Frauds were committed in one of six departments; accounting,
operations, sales, executive management, customer service, purchasing
5. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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The What
Defalcation last typically 16 months
Fraudulent disbursements make up 64% of cases reviewed
60% of Occupational Fraud loss at least $100,000
Companies with less than 100 employees make up 30.8% the
cases
Companies with 1,000 – 9,999 employees make up 25.9% of
cases
6. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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The Why
The Four “D’s”
Debt and Gambling
Drug and Alcohol Abuse
Divorce and Marital Problems
Disgruntled Employee
7. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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The Who
Typical Embezzler
Management or supervisor position
7 years plus with company
Annual Income $100,000 - $149,000
Male 66.7%
Female 33.3%
Age 19.3% are 36 – 40, 19.3%, 41-50
Bachelors Degree 52%
First Time Offender
8. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Detection Association of Certified Fraud Examiners
2004 Report to the Nation on Occupational Fraud and Abuse
9. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Cash Misappropriation
Fraudulent Disbursements – Perpetrator causes company to
disburse funds by device or trick – Example: False invoices,
forged company check
Skimming - Cash is stolen before been booked
Cash Larceny – Cash is stolen after been booked
2/3rd of all cash frauds were Fraudulent disbursements
10. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Case Study 1
Fictitious Invoice
Employee in Department works with Vendor
Vendor creates invoice
Employee approves invoice and submits to AP
AP pays invoice for products or services not received
11. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Case Study 2
Duplicate Payment
AP Employee creates fictitious invoice using original invoice
documentation
Check is cut to Vendor
AP Employee calls vendor and informs them of the duplicate
payment
AP Employee suggests that a refund check be cut per his or her
attention or made out to another name
AP Employee receives refund check and pockets the cash
12. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Case Study 3
Budget Manipulation
Department Head contacts Vendor and suggests a pre-payment to
vendor
Vendor sends invoice to Company
Transaction number is noted as a quote number rather than an
invoice number
Pre-payment check is cut to vendor
Department expenses are misstated
Department uses open vendor credit to adhere to budget
Department receives bonuses on adherence to budget
13. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Dry Run Test
This test identifies vendors or suppliers with large average invoice
dollar values that have a very low minimum invoice value
The purpose of this test is to isolate invoices that are for a very low
dollar amount compared to the average. This can help to identify if
vendor/supplier is being used to test internal controls in the
accounting system
Suggested review of even dollar invoices such as ($1.00, $5.00,
$10.00, $20.00….)
14. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Dry Run Test - Results
Item No. Vendor Number Vendor Name Average Invoice Amount First Invoice Amount Dry Run Test Percentage
1 723143234 OBAYASHI CORPORATION $563,712.13 $1,039.47 0.18%
2 306142033 DELL COMPUTER CORP $39,268.33 $93.00 0.24%
3 326114242 SODEXHO MARRIOTT CORPORATION $5,168.15 $17.76 0.34%
4 101091156 RF MACDONALD COMPANY $8,733.35 $52.24 0.60%
5 420101954 CELESTICA CORP. $22,369.95 $190.00 0.85%
6 327071713 SOCIETY FOR INFO. DISPLAY $7,597.50 $75.00 0.99%
7 101041067 P G & E $10,337.60 $105.80 1.02%
8 B04132909 ROPERS, MAJESKI, KOHN&BENTLEY $7,460.67 $90.00 1.21%
9 C01141001 HEWLETT PACKARD COMPANY $9,213.66 $112.58 1.22%
10 611145017 SHINKO AMERICA INCORPORATED $15,595.70 $233.73 1.50%
11 902094321 DURR ENVIRONMENTAL INCORPORATED $6,093.45 $105.34 1.73%
12 101091451 PRAXAIR INCORPORATED $17,107.90 $321.75 1.88%
13 330102517 EBARA TECHNOLOGIES INCORPORATED $18,607.67 $372.72 2.00%
14 331110258 COLLIERS HOUSTON & CO.PROPERT $5,170.14 $107.27 2.07%
15 A05094025 ORACLE CORPORATION $36,485.84 $880.00 2.41%
74 101041424 TOPPAN ELECTRONICS INC $31,016.11 $4,170.00 13.44%
75 125085409 TECHNICAL INSTRUMENT SAN FRANCISCO $6,229.18 $845.57 13.57%
76 911145522 SMI ELECTRONIC DEVICES AMERICA INC $25,950.20 $3,803.09 14.66%
77 0000000144 Dense Pac $9,772.92 $1,461.65 14.96%
78 101091169 RAY L HELLWIG PLUMBING & HEATING COMPANY $8,591.34 $1,310.00 15.25%
79 815103903 JEOL USA INCORPORATED $9,656.70 $1,491.70 15.45%
80 0000000299 ALLIED SECURITY $8,574.86 $1,388.80 16.20%
Client: xyz Company - Report XI
Dry Run Test
15. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Consecutive Invoice Numbering
This test identifies vendor/suppliers with consecutive invoice
numbering
The purpose of this test is two fold
1. Test can be used to identify misappropriations of funds by employee using
consecutive invoice numbers
2. Test can also be used as a risk management tool to identify vendors or
suppliers where your company is their only source of income. You can create
appropriate alternatives if the vendor or supplier goes out of business
16. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Consecutive Invoice Numbering - Results
ID
Invoice
Number
Invoice
Date Invoice Amount PO ID
Vendor
Number Vendor Name Address 1 Address 2 City State
Postal
Code
Check
Number
Check
Date
31104 126012607 12/06/03 $11,615.49 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31105 126012608 12/07/03 $154.69 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31106 126012609 12/07/03 $24,012.94 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31107 126012610 12/07/03 $153.93 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31108 126012611 12/05/03 $45,563.01 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31109 126012612 12/05/03 $153.93 6602 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311532 01/17/04
31139 126015480 01/16/04 $5,233.59 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31140 126015481 01/16/04 $769.65 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31141 126015482 01/16/04 $3,540.37 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31142 126015483 01/16/04 $1,693.22 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31143 126015484 01/16/04 $3,386.44 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31144 126015485 01/16/04 $593.82 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31145 126015486 01/16/04 $928.17 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31146 126015487 01/16/04 $618.78 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
31147 126015488 01/16/04 $8,662.90 420101954 CELESTIC SEASONING 2121 QUMEN DRIVE SAN MARCTX 72315 3311642 02/22/04
75541 507600 06/29/03 $2,861.43 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75542 507601 06/29/03 $504.60 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75543 507602 06/29/03 $963.09 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75544 507603 06/29/03 $456.75 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75545 507604 06/29/03 $124.41 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75546 507605 06/29/03 $287.10 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75547 507606 06/29/03 $12.92 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
75548 507607 06/29/03 $30.45 415082120 MORRIS, MORTON, HOWE 137 METEOR BLVD. SUITE 700 SAN JOSE CA 95110 3312624 08/08/03
82364 602104/0100 01/01/03 $3,384.17 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305826 04/03/03
82365 602104/0200 02/01/03 $3,178.06 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305826 04/03/03
82366 602104/0300 03/01/03 $2,670.82 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305826 04/03/03
82367 602104/0400 04/01/03 $3,404.77 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305826 04/03/03
82368 602104/0500 05/01/03 $3,184.09 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305836 07/03/03
82369 602104/0600 06/01/03 $3,053.95 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305836 07/03/03
82370 602104/0700 07/01/03 $2,996.78 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305836 07/03/03
82371 602104/0800 08/01/03 $3,498.83 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305842 09/03/03
82372 602104/0900 09/01/03 $3,350.58 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305842 09/03/03
82373 602104/1000 10/01/03 $1,986.51 L213709B 119163000 CORPORATE TRANSPORTATION INC FILE 66970 PO BOX 22100 SAN FRANCA 94144-4758 3305856 12/03/03
Client: xyz Company - Report XII
Vendors / Consecutive Invoice Numbering
Prepared by: Corporate Audit Partners
17. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Non-Sequential Invoice Numbering
This test identifies invoices out of character sequence.
Most vendors or suppliers use the same sequence of alpha
numeric character
By isolating characters out of sequence the company may be able
to identify defalcation, budget manipulation or wrong vendor
payment
19. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Vendor Histogram
This test identifies Vendor payment trends during a given time
period
Most vendors or suppliers have similar transaction cycles or
transaction amounts
Unusual or significant increases in either the frequency or value of
transactions can signify defalcation or collusion
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Vendor Histogram
21. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Vendors Scatter Graph
This test identifies all Vendor payment trends during a given time
period and maps anomalies
Horizontal analysis of year over year or period over period
Most vendors or suppliers have similar transaction cycles or
transaction amounts
Unusual or significant increases in either the frequency or value of
transactions can signify defalcation, collusion, or growing
inefficiencies.
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Vendor Scatter Graph
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P.O. Box Only Addresses
This test identifies vendors or supplies that only have PO Box
address
The purpose of this test is to identify vendors that have no physical
address
All vendors or suppliers should have a physical address listed in the
vendor master file
The lack of a physical address may be an indication that a vendor
has been set up fictitiously in the vendor master file.
24. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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P.O. Box Only Address - Results
Vendor Master Report IV
Vendor
Number Vendor Name Address1 City State Country Zip
4064 ABF FREIGHT SYSTEM, INC. PO BOX 142088 AUSTIN TX US 78714-2088
6849 ACCENT FLOORING, INC. PO BOX 19015 AUSTIN TX US 78760
9905 ADVANCE PLASTIC FABRICATORS PO BOX 5117 ROUND ROCK TX US 78683-5117
7907 AIRGROUP EXPRESS P.O. Box 3627 Bellevue WA US 98009-3627
5184 BAYSHORE PRESS PO BOX 67303 SCOTTS VALLEY CA US 95067-7303
1653 BETZDEARBORN, INC. PO BOX 846046 DALLAS TX US 75284-6046
9928 BGS INCENTIVE ACTIVITIES PO BOX 6044 KAMUELA HI US 96743
10598 CABLE ONE PO BOX 10 CALDWELL ID US 83606
8029 CALIFORNIA TECHNICAL INDUSTRIES PO BOX 66868 SCOTTS VALLEY CA US 95067-6868
11466 DANAHER POWER SOLUTIONS PO BOX 98392 CHICAGO IL US 60693
9821 DAVID RODERICK PO BOX 640295 SAN JOSE CA US 95164-0295
4776 DELTEX, INC. PO BOX 3258 LITTLETON CO US 80161-3258
2528 EESCO/UNITED ELECTRIC CO. PO BOX 91626 CHICAGO IL US 60693
9976 FINZER IMAGING SYSTEMS PO BOX 39082 DENVER CO US 80239-0082
6376 GOMEZ ENERGY SERVICES PO BOX 5082 GEORGETOWN TX US 78627
8455 HARTSTON,INC PO BOX 21941 LEXINGTON KY US 40522-1941
5504 L&L ASSOCIATES P.O. BOX 541 BREA CA US 92822
7065 MEETING SOLUTIONS, INC. PO BOX 4062 AUSTIN TX US 78765-4062
8348 MICRO COMPUTER CONTROL CORP. PO BOX 275 HOPEWELL NJ US 08525
7520 O.C. MCDONALD COMPANY INC. PO BOX 26560 SAN JOSE CA US 95159
9111 PADGETT THOMPSON PO BOX 4725 BUFFALO NY US 14240-4725
8721 PENINSULA VISA & PASSPORT SERVICES PO BOX 28 SANTA CLARA CA US 95052
6847 PIONEER PRESS PO BOX 64890 ST PAUL MN US 55164
2435 PNEUMATICO, INC. PO BOX 410310 MELBOURNE FL US 32941-0310
1891 PURVIS BEARING SERVICES, INC. PO BOX 540757 DALLAS TX US 75354-0757
9135 R&M ELECTRIC INC PO BOX 63479 COLORADO SPRINGS CO US 80962-3479
10365 SEZ AMERICA, INC. PO BOX 29830 PHOENIX AZ US 85038-9830
Box Report - Vendors with PO Box Only Address
25. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Address Analysis
This test compares vendor addresses to employee addresses
This test can be used to identify employees who have set up
fictitious vendors in the vendor master file
There may well be occasions where an employee is also set
up as a supplier or vendors but you should be aware of them
26. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Address Analysis - Results
Address
Match
Employee
ID
Vendor
Number Vendor Name Address 1 Address 2 City State Postal Code
614153317 DOUBLETREE HOTEL SAN JOSE 1050 GATEWAY PLACE SAN JOSE CA 95110
0000000845 Plotter Pros 1086 The Alameda Suite 100 San Jose CA 95116
C11145617 RECOMMENDED RESOURCES 11 AMHERST ROAD AMHERST MA 1001
C11145617 RECOMMENDED RESOURCES (INACTIVE) 11 AMHERST ROAD AMHERST MA 1001
MATCH 009985 1336 Hill San Marcos TX 78022
MATCH 917150807 S M DESIGNES 1336 HILL St SAN MARCOS TX 78022
711131708 RT CONSTRUCTION 13455 NOEL RD SUITE 430 DALLAS TX 75140
615094134 RYDER TRANSPORTATION SERVICES 1481 O'TOOLE AVENUE SAN JOSE CA 95131
617143713 MONARCH INSTRUMENT 15 COLUMBIA DRIVE AMHERST NH 03031-1334
616094959 MASON WEST INCORPORATED 1840 GRETTO LANE ANAHEIM CA 91806
517160003 ADVANCED SYSTEM SOLUTIONS 3115 PERIVALE CT SAN JOSE CA 95148
831 Ev ent Connections 3657 El Grande Driv e San Jose CA 95131
110 MURAD SALES INCORPORATED 4600 GREENVILLE AVE SU DALLAS TX 75106
MATCH 731143218 G Consulting 5506 CHIMNEY RCK DR IRVING TX 76017
MATCH 009511 5506 Chimney Rock Driv e IRVING TX 76017
111 JUNIOR NATIONAL WHEELCHAIR CHAMPIONSHIPS 5730 CHAMBERLIN DRIVE SAN JOSE CA 95118
0000000510 HANSON PUBLICATIONS 64 CLIFTON AVENUE PO B AN SONIA CT 06401-0514
MATCH 008701 6610 Manzanita Dr. San Marcos TX 78027
MATCH A28135104 JS GRAPHICS 6610 MANZANITA DRIVE SAN MARCOS TX 78027
0000000701 INTERNET ASSOCIATION GROUP, INC. 6610 SOUTHPOINT DRIVE SUITE 600 JACKSONVILLE FL 31116
MATCH 007901 6701 row Way Laconia CA 05842
MATCH 624135327 DYGNETS 6701 ROW WAY LACONIA NH 05842
811 BLACKSTONE - NEY 9 N. MAIN ST JAMESTOWN NY 14701
817111810 CAE ULTRACSONICS 9 NORTH MAIN STREET JAMESTOWN NY 14701-0110
101090844 LAB SAFETY SUPPLY INCORPORATED DEPT #0000185191 PO BOX 5004 JANESVILLE WI 53547-5004
909111811 SPECIALIZED PRODUCTS COMPANY PO BOX 890006 DALLAS TX 75389-0006
101090036 LAIRD PLASTICS PO BOX 951111 DALLAS TX 75395
516165940 RW/STEARNS RIVER PARK TOWER 333 W. SAN CARLOS SSAN JOSE CA 95110-1711
515091707 IEEE VLSI TEST SYMPOSIUM VLSI Test Sy mposium 1001 Attn: Maddie Harw ood Amissv ille VA 10106
Client: xyz Company - Report VI
Employee Address / Vendors Address Comparison
27. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Bank Code Analysis
This test identifies instances where a vendor/supplier and an
employee have the same bank code number
The test can also identify if multiple employees have the same
bank code number
The purpose of this test is to find fictitious vendors or employees
set up in the payroll or vendor master files
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Benford's Law
P(kx) = f(k)P(x)
If fP(x)dx = 1, then fP(kx)dx = 1/k, and
normalization implies f(k) – 1/k. Differentiating
with respect to k and settings k = 1 gives
xPⁿ(x) = -P(x)
If you can understand this you are in the wrong workshop!
29. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law
123456789
$1,000,000 1
$23 2
$542 5
$100 1
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Benford’s Law - Why does it work!
Functional Dependence
Budget data depends on
Corporation Size
Particular Industry
Quality of Management
State of the Market
Sales growth
31. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford's Law - History
1881 Simon Newcomb American Astronomer “Notes on the
Frequency of the use of Digits in Natural Numbers”
1938 Dr. Frank Benford Electrical Engineer General Electric “The
Law of Anomalous Numbers”
1992 Dr. Mark Nigrini “Detection of Income Tax Evasion Through
and Analysis of Digital Frequencies”
1999 Dr. Mark Nigrini “I’ve Got Your Number”
2002 Dr. Mark Nigrini “Using Microsoft Access for Data Analysis
and Interrogation”
Mark J. Nigrini Ph.D. / Saint Michael's College / http://www.nigrini.com/
Dept of Business and Acctg - Campus box 104
One Winooski Park / Colchester Vermont 05439
Tel: (802) 654-2894 (Saint Michael's office)
35. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Using Access Database
Invoice Transaction Table
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Benford’s Law - Using Access Database
Raw Invoice Transaction Data
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Benford’s Law - Using Access Database
Query Object
This is where the data analysis actually occurs
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Benford’s Law - Using Access Database
Run Query to see results
Query built to strip off left most digit
from the invoice amount
39. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Using Access Database
Invoice Amount
Stripped Left Most Digit
40. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Using Access Database
Summary Query to Summarize
Benford’s Law First Digit results
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Benford’s Law - Using Access Database
Group By Button
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Benford’s Law - Using Access Database
Benford’s Law First Digit Results
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Benford’s Law - Using Access Database
Send analysis to Microsoft Excel
Worksheet
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Benford’s Law - Excel Download
Results downloaded to Excel
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Benford’s Law - Excel Analysis
46. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Excel Analysis
47. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Two-Digit Analysis
Benfords Law Two-Digit
Expression
48. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Two-Digit Analysis
Invoice Amount
Stripped Left Most Digit
49. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
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Benford’s Law - Two-Digit Analysis
Benford’s Law
First Two Digit
Results
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Benford’s Law - Two-Digit Analysis
Findings
Frequency
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Benford’s Law - Two-Digit Analysis
Anomalies to review
52. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Number Duplication Subset Test
The Number Duplication test will tell what specific numbers were
causing spikes (positive differences) on the first-two digit test
For each of the number categories we want a table of number
frequencies showing:
1. The rank (1,2,3,4,5…..)
2. The frequency (or count), and
3. The number (usually dollars) that was duplicated
The table is usually sorted by frequency descending
53. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Number Duplication Subset
Access Query
54. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Number Duplication - Test Results
The invoice amount of $315.00
was entered 690 times
55. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Number Duplication Test - Design View
56. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Number Duplication - Test by Vendor
Number Duplication
Isolated by Vendor
57. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Conclusion
Data analysis can help to isolate anomalies for further review
The best prevention is constant testing
Please feel free to contact us at any time with questions or comments
Thank you for your participation
Greg Taylor / Corporate Audit Partners
Phone: 949.488.7648 Ext 829
Email: gtaylor@corporateaudits.com
Website: www.corporateaudits.com
58. Corporate Audit Partners - 30900 Rancho Viejo Road - Suite 245
San Juan Capistrano, CA 92675
Reference Material
Mark J. Nigrini Ph.D. / Saint Michael's College / http://www.nigrini.com/
Dept of Business and Acctg - Campus box 104
One Winooski Park / Colchester Vermont 05439
Tel: (802) 654-2894 (Saint Michael's office)
Association of Certified Fraud Examiners Inc. / www.CFEnet.com
The Gregor Building
716 West Avenue / Austin, TX 78701-2727
Tel: (800) 245-3321
Corporate Audit Partners
VRM Partner™
Advanced Software Solutions
Phone: 949.488.7648 Ext 829
Email: gtaylor@corporateaudits.com
Web: www.corporateaudits.com