Data analytics is a powerful tool in fraud detection and is often used to search

Question

Data analytics is a powerful tool in fraud detection and is often used to search for signs of fraud in the purchasing function. To learn more aout data analytics as a fraud detection tool is purchasing, visit the Fraud Magazine Web site (www.fraud-magazine.com) and search for the January 2013 article "Devil in the details: anti fraud data analytics."

a. The article discusses a purchasing fraud that occurred in a stage government agency. What was the nature of the internal controls over the purchasing function in the agency that provided the opportunity for fraud to occur? What were the incentives of the purchasing department to commit the fraud?

b. How can data analytics tools be used to detect fraud in the purchasing function?

c. Describe three analyses a fraud examiner could perform to detect fraud related to a particular vendor (e.g. calculate year-to-year percentage changes in total purchases from each vendor).

Explanation / Answer

a. The nature of internal controls over the purchasing function in the agency that provided the opportunity for fraud to occur is as follows :

b. Data analytics tool can be used in following ways to detect fraud in purchasing function :

c. Three analysis can be:

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