Digital Forensics: A Tool for Detecting Fraud Risk

Does your business have more than one bank account?

If businesses have more than one bank account, then they face the risk of dealing with inappropriate cash movements if they are just monitored manually. Does this raise some red flags? Please take a closer look and note these top two anti-fraud controls to implement today:

These methods below present a relatively new way of doing business for many organisations and should be urgently implemented to limit further risks.

Automated continuous monitoring of key processes: red flags 

One of these methods is utilising an automated, continuous monitoring application on key processes, such as payments. The monitoring application may be configured to raise red flags and inform the relevant official when certain conditions or combinations are triggered.

Examples of these are: 

• Payments made outside of normal operating hours. 
• Payments to bank accounts not associated with vendors registered on the organisation's vendor database. 
• Non-salary-related payments made to bank accounts linked to employees, which may also indicate fraudulent re-channelling of payments. 
• Cumulative payments by the organisation to vendors which exceed the value of the respective purchase orders

Automated continuous monitoring

Another way the monitoring application may be used is in trend analysis. For example, certain trends that become apparent when the application runs its processes may be followed up by the relevant official to determine whether there is anything untoward. Without a centralised analytical tool or process, it becomes difficult for an organisation's official(s) to see patterns emerging.

Examples of trends that the monitoring application may pick up are:

-Medical practitioners submitting false medical aid claims for supposedly seeing an excessive number of patients per working day.

- Trend analysis may also be used for the verification of certain accounts. For example, a donor-funded institution expects its implementing partner to utilise funds only for approved projects and within approved budgets.

In a forensic investigation we conducted a few years ago, we identified an implementing partner involved in a programme for feeding and educating disadvantaged children in a rural area. The partner's financial reports were within a budget month after month for every budget line. So, the donor institution's project finance officer saw no need to pay further attention to the financial reports.

However, when we performed a granular analysis of the reported spend per line, unusual trends were identified, such as every child on the programme supposedly obtaining five litres of cooking oil every month (regardless of household size), Every child supposedly obtaining one ruler, two pencils and two erasers every month during the year. What very busy pupils the children must have been! We even identified improper use of funds by the implementing partner.

We always keep pace with the changes in an organisation's needs, and well-suited to enforce robust digital forensic solutions fit for your organisation.