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.