Most Common Types of Fraud and How to Find Them

Knowing what to look for is vital to building a fraud detection program. The following patterns are based on descriptions of assorted types of fraud and the Assessment used to discover the fraud:

Techniques used to Detect Fraud

Type of fraud: Fictitious vendors

The assessment used to discover this fraud:

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• Run Assessment to reveal post office boxes used as addresses and to discover any similarities between vendor and employee addresses and/or phone numbers

• Be watchful for vendors with comparable sounding names or more than one vendor with the same address and phone number

Type of fraud: Altered invoices

The assessment used to discover this fraud:

• Search for replicas

• Examine invoice amounts not corresponding to agreements or purchase order amounts

Type of fraud: Fixed bidding

The assessment used to discover this fraud:

• Review contract amounts by the vendor and compares vendor totals for several years to determine if a single vendor is being awarded most bids

• Determine the days between bid ending dates and contract submission to see if the last bidder is awarded the contract most often

Type of fraud: Duplicate invoices

The assessment used to discover this fraud:

• Review for duplicate invoice numbers, duplicate date, and invoice amounts

• Determine if invoices appear to be altered in any way.

• Determine if duplicate invoice numbers are used for different vendors

Type of fraud: Inflated prices

The assessment used to discover this fraud:

• Compare prices between vendors to see if prices from a certain vendor is unjustly high

Type of fraud: Excess quantities purchased

The assessment used to discover this fraud:

• Check for unknown reasons for increases in inventory

• Ensure that purchase amounts of raw materials align with production levels

• Review quantities ordered in previous contract periods to determine if there are unexplained increases.