Companies and individuals that try to conceal their thefts tend to develop non-conforming digit (number) patterns that violate the blueprint of randomness. These patterns can be detected with the use of Digital Analysis techniques.
Digital Analysis is a method of analyzing groups of data to identify non-conforming patterns or anomalies within a data set. The anomalies detected can assist in leading the forensic accountant to areas where further investigation may be necessary. The growing benefit of these techniques has resulted in many computer-related applications for the forensic accountant to effectively perform financial forensic accounting investigations. This allows the forensic accountant to take an unbiased look at 100% of the data set, regardless of the volume of transactions. In addition, the use of
For example, a common type of business fraud is where a dishonest employee creates a fictitious vendor entity to funnel payments out of the victim entity. The fraudulent entity may very well contain attributes that match that of the dishonest employee, such as the same address or telephone number. Given these circumstances,
Suppose, in the example provided above, the forensic accountant is able to obtain two company reports, a list of employees containing hundreds of names and addresses of current and past employees, and an extensive list of company vendors. Both of these reports are located in only readable PDF, not in Excel or any other searchable format. The forensic accountant would need to compare these two reports in order to determine where potential non-conforming patterns exist.
With the use of
Although fraudulent activity continues to grow more complex, certain aspects remain the same. People trying to conceal fraud tend to develop non-conforming digit patterns that will not generate random numbers. Digital analysis techniques, and the use of
“The perpetrators of financial crimes often times use state of the art technologies to commit their wrongdoings. In order to catch these individuals, it is up to the forensic accountant to match these advanced technologies with techniques of their own. Digital Analysis and Data Mining are just two of the tools in the forensic accountants’ arsenal,” says
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