How are you increasing your fraud detection rates.

If your data analysis approach isn’t consistent and simple, you’re doing it wrong.

Firstly…

Do you know what data points to look at?

This is how you can start looking for patterns and relationships.

As a start…

 Comparing more than one fraud indicator can help you.

• Look for duplicate payments.

Generally speaking, duplicate payments can mean either ‘error’ or ‘fraud’.

Errors can be made and at the very least you can recover these payments from the supplier,

however…

Do you look further to assess whether there is a corrupt relationship.

Do you have a pattern?

• Look for a potential supplier relationship.

Identifying a hidden corrupt relationship is always a challenge.

One easy check to see if the risk is within accounts payable.

Simply looking at the aggregate time it takes for individuals and accounts payable to make supplier payments.

If the average time for a department to make supplier payments is 30 days 

and…

One staff member only takes 14 days to pay the same supplier, is this a corruption indicator.

This will become more relevant if it’s the same member of staff that consistently pays the same supplier.

If you match this against duplicate payments, you may have a bigger pattern and methodology in which fraud is occurring.

Consider this case example

During our risk assessment of a company’s procurement lifecycle 

it was highlighted that 60% of invoices were received where 

there was no requisition or purchase order raised.

Although the finance team requested the requisition and purchase order before payment, what was never progressed was…

• Looking for the level of fictious requisitions
• Patterns of payment to specific suppliers without supporting documentation

These fraud indicators will allow you to track back within the procurement data to determine… 

• if it was only duplicate payments that were being made, or
• if fictitious requirements and other fraud schemes were carried out.

Sometimes the best way to assess your fraud risk is to start with the invoice or payment and track backwards.

Remember: even if it’s an error in payment you have the opportunity to recover funds.

Will you add this to your detection approach?