There is no doubt that fraud is a complex phenomenon that has taken place for thousands of years. Fraud has and continues to be a pervasive issue in human society, especially with vastness of the internet and opportunities for anonymity it has created.
Defence of criminal charges of fraud and other related offences often requires evaluation of voluminous documentation such as invoices, receipts, bank statements, accounting journals and other business databases. It also requires consideration of evolving technologies in which alleged frauds take place such as email, social media, computer/cell phone applications, cryptocurrency platforms and so forth. Thus, it is essential to understand not just the legal landscape for white-collar crime, but the shifting factual landscape in which it occurs.
The 2021 fraud conference was hosted by Association of Certified Fraud Examiners and recently held in Ottawa and took place over 3 days.
On November 7, 2021, Mary Breslin presented about using data analytics to fight fraud. During this session the presenter emphasized the importance of being familiar with different fraud schemes, red flags for fraudulent activity, and the fraud triangle: rationalization, opportunity, and pressure. The presenter provided a balanced perspective, stating that financial behaviour occurs across a spectrum from normal to bad business to waste and abuse and finally to fraud. In addition, anomalies in financial information and data might occur in the usual course of business and are not necessarily representative of fraudulent activity. Data analytics is limited by the reliability of the data it uses; fraud is often baked into the numbers. To that end, data analytics is only the beginning of an investigation.
There are key data sets that an organization can look at in conducting analytics to prevent fraud including financial statements as well as employee, vendor and customer data bases. Are the numbers and names consistent? Is there duplication of transactions or entries? Are there untimely financial account reconciliations? Are there unreconciled financial accounts? Have original entries been adjusted? Is there a high employee turn over? In addition, data analytics uses artificial intelligence and bots to locate trends and facilitate decryption. This has dramatically reduced the amount of human working hours for technical and repetitive tasks.
An important take away from the seminar was that companies who employ data analytics to detect fraud can not only detect it, but prevent fraud from being perpetrated to a very significant extent. This is because if individuals are aware that data analytics programs are being used, this acts as powerful deterrent for fraudulent activity. According to the presenter: “Using effective data analytics as part of an organization’s fraud management program can reduce a fraud scheme’s average duration from 18 months to mere weeks or, in some cases, eliminate it.” This figure is significant. It presumes however that the data is reliable, captures all of the behaviours within the business, and that individuals operating within do not attempt to circumvent existing analytics by creating different types of transactions.
On November 8, 2021, Ryan Duquette, presented on Fraud and Cybercrime in the hybrid workplace environment. In this very informative seminar, he discussed the increasing cyber attacks involving ransomware as individuals have worked from home during the COVID-19 pandemic. Some of the more common threats identified against the remote workforce include registration of malicious zoom-themed web conference domains, purchases of domains containing “covid” and “corona” key terms, and attacks on business emails. Not surprisingly, there has been a dramatic increase in ransomware attacks on business emails in the last two years. In addition, websites for QR codes that individuals scan at bars and restaurants are not secure and are susceptible to identity theft.
There truly is no lack of ingenuity in our evolving digital world. From a privacy perspective, there has been a tremendous shift due to the proliferation of online services. Often individuals are now required to submit significant personal information online in order to access services that were previously not used to the extent they are now: Online exams and certifications. Thanks again ACFE, for such great seminars and educational material.