Fraud Data Analytics Methodology

Chapter 9Fraud Data Analytics for Company Credit Cards

The general consensus is that fraud does and will occur within your procurement card system. This is not a reflection on the internal controls but rather the fraud triangle, which indicates that opportunity, pressure, and rationalization is present when fraud occurs. The opportunity is created by the fact that when an employee is assigned a procurement card, the employee can use the card for legitimate business needs or for fraudulent needs. Yes, we can implement many internal controls, but the bottom line is that we cannot prevent an employee from using the card for non‐business purposes. However, we can detect the employee that uses the card for non‐business purposes. Through our fraud response practices we can deter employees who may consider using the card for non‐business purposes, but cannot simply stop an employee.

The purpose of the chapter is to identify the fraud scenarios associated with procurement card fraud and provide data interrogation routines that will facilitate our sample selection process. The good news is, most of the common scenarios are widely known. The bad news or difficult news is that the sheer volume of small‐dollar transactions that are processed through the system on an annual basis functions as a general concealment strategy.

The starting point is to realize that the inherent fraud scenarios confronting the procurement card are the same inherent fraud scenarios described in Chapter 7. Procurement ...