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Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations by Mark J. Nigrini, PH.D

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Chapter 16

Examples of Risk Scoring with Access Queries

Chapter 15 discussed the risk-scoring approach and the use thereof at a fast-food franchising company. This chapter is a continuation of the previous chapter with a review of other applications and an Access example. The chapter reviews the audit selection process used by the Internal Revenue Service (IRS) to demonstrate a highly sophisticated selection system. Other examples of the risk-scoring method are then reviewed. The examples include a banking fraud application, an airline ticketing fraud application, and a fictitious vendor fraud application. An example with financial statement fraud is presented in Chapter 17. The chapter concludes with an Access example showing a risk-scoring system designed to detect fraudulent vendors. Also discussed are general issues with using Access for these applications.

The risk-scoring model draws on the theory underlying decision-making cues. Using a psychology analogy, the predictors are the same as cues for decision making and the predictor weights are the same as the weights given to the decision-making cues. These weights have been addressed in psychological research studies. An early reference is Slovic (1966) in which he notes that little is known about the manner in which human subjects combine information from multiple cues, each with a probabilistic relationship to a criterion, into a unitary judgment about that criterion.

Slovic (1966) noted that a set of cues was consistent ...

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