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Fraud Data Analytics Methodology by Leonard W. Vona

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Appendix AData Mining Audit Program for Shell Companies

  1. Background on the project.

    The purpose of this audit program is to provide an illustration of how to develop a fraud data analytics audit program for shell companies. The same format should be used for the remaining chapters and for your future fraud data analytics projects.

    The audit program will need to be tailored to your organization. I have also included in the program different concepts to illustrate different ways you can tailor the program; please look for the “Note comment.”

    The background section should describe the purpose of the audit assignment and provide the necessary background for the project.

  2. Definition of terms. (Note: Definitions should be a standard element in fraud data analytics audit programs.)
    1. Shell company: is a legally created entity that has no active business or is intended to conceal the true identity of the real company operating through a shell company. In essence, a shell corporation exists mainly on paper, has no physical presence, employs no one, and produces nothing.
    2. Created company (shell company) committing a false billing scheme: is a shell company that was created by an internal person and the internal person causes false invoices to be paid through the accounts payable system (typically services).
    3. Created company (shell company) committing a pass‐through billing scheme: is a shell company that was by created by an internal person and the company receives the goods or services (typically ...

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