Forensic Analytics, 2nd Edition

CHAPTER 2The Initial High-Level Overview Tests

CHAPTER 1 INTRODUCED EXCEL AS our main quantitative forensic tool. Excel is an effective and efficient tool that can store data, perform calculations, and report the results. Access is our second choice tool that is more organized in that it uses tables, queries, and reports to store data, perform calculations, and neatly report the results of our analytic tests. Our overview of Access is deferred until Chapter 16 because most readers will stick with Excel and will bypass the Access screenshots shown in the various chapters. IDEA and R are our joint third choice tools, and IDEA is briefly shown in a few chapters while R is introduced in Chapter 16. The tests that are described in the next eleven chapters are demonstrated using Excel and Access, unless one or both is just not suitable for the task.

Bolton and Hand (2002) state that the fraud detection tools all have a common theme in that actual data is usually compared with a set of expected values. Depending on the context, these expected values can be derived in various ways and could vary on a continuum from single numerical or graphical summaries, all the way to complex multivariate behavior profiles. Their discussion of expected values includes a discussion of Benford's Law. They contrast supervised methods of fraud detection, which uses samples of both fraudulent and legitimate records, and unsupervised methods, which identify transactions or customers that are most dissimilar ...