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FORENSIC ACCOUNTING INVSTIGATION TECHNIQUES (Data Mining (Techniques…
FORENSIC ACCOUNTING INVSTIGATION TECHNIQUES
Computer Assisted Reviews and Document Review
Losey (2016)
Computer Assisted Review (CAR) is review of documents with the assistance of computers and specially designed legal search and review software is a well-established best practice
Process where computer software as indispensable tools is used to search and find relevant evidence in a big data setting
CAR best practices
Predictive Coding
Bottom Line Driven Proportional Review
Hybrid Multimodal
Review Quality Controls
Ratio Analysis
detect fraud when the fraud impacts the numerator and denominator in a proportion that differs from the normal (properly stated) ratio
Pinkasovitch (2016)
comparative ratio analysis also allows analysts and auditors to spot discrepancies within the firm's financial statements
Data Mining
Galvanize (2015)
Design to explore data
Brown (2012)
Data mining is about processing data and identifying patterns and trends in that information so that you can decide or judge
most important task in data mining is to extract non-trivial nuggets from large amounts of data
(Christopher, 2010; Trevor, Robert, & Jerome 2009).
computational process of discovering patterns in large data sets involving methods at the intersection of artificial intelligence, machine learning, statistics, and database systems
Tasks of data
create a descriptive power
create a predictive power
Techniques
Association Rule Discovery (descriptive)
Classification (predictive)
Regression (predictive)
Clustering (descriptive)
Data Matching
task of finding records that refer to the same entity
(Garcia, 2014).
these records come from multiple data sets and have no common entity identifiers, but data matching techniques can also be used to detect duplicate records within a single database
Data Matching is also known as Record Linkage, Object Identification or Entity Resolution
identifying and matching records across multiple data sets is a very challenging task for many reasons
data matching algorithms are very sensitive to data quality
it necessary to pre-process the data being linked in order to ensure a minimal quality standard, at least for the key identifier attributes
Identifying anomalies
Major tools
Training & experience
Necessary mindset
Chartered Institute of Management Accountants (CIMA) (2008)
CIMA suggested techniques
Background reading
Risk assessment
Benchmarking
Systems analysis
Ratio analysis
Mathematical modelling
Specialist software
Exception reporting
Benford Law
used to detect anomalies in data, whether from clerical errors, random chance, or outright manipulation
Benford's law, also called the first-digit law, is an observation about the frequency distribution of leading digits in many real-life sets of numerical data
states that many kinds of number sets should follow a logarithmic distribution known as Benford’s distribution