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TOPIC 7 : Forensic Accounting Tools & Techniques - Coggle Diagram
TOPIC 7 : Forensic Accounting Tools & Techniques
Benford Analysis
Intro
Benford's Law (Frank Benford)
Usefulness
set of mathematical combination
transaction level data
large data sets
confomitory accounts
Unuseful
Assigned numbers
Human influence on it
firm specific numbers
built in threshold
no transaction
Theory of Relative Size (RSF)
Intro
Detects outliers and unusual data
ratio to largest /second largest
Stray number
Computer assisted Asuit Tools (CAAT)
Computer software designed to test/asist
Help by
Test details of transaction
Identify inconsistency
test general controls
sampling programs
redoing calculation
2 types
Data extraction
Financial analysis
Data Mining Techniqus
Designed to mine large data sets
Discovery
Predictive Modelling
Deviation & link analysis
Benefits
Analyse LArge sum and see trend
cost effective/comprehensive
easy to summarize
Pitfalls
One part onlly
not a substitute/ cause need judgement
lead to premature/incorect statements
niche
too much reliance, skew decisions
Analytical Procedures
data analysis ratios
Types
Trend ANalysis
Ratio Analysis
When
Periodic information
current period to budget or forecasts
rsltionship of financial vs non financial
comparison information of similar natuire
Net worth Method
Net worth difference
Assets (E) - Liabilities (E) - Assets (O) +Known Expenses - Fund from Known Socurces
Issues
Calculation of each net worh
Cash in Hand
technical assumptions
time and effort to find
Various Audit Techniques
Tracing Vs Vouching
Surprise COunts
Statsitical Sampling
Reconcilation
Confirmations