Managing third-party risk
Forensic data analytics
Forensic data analytics identifies unethical practices
The use of forensic data analytics (FDA) enables companies to transform large volumes of transactional data into valuable actionable business intelligence within a short period of time.
FDA does not rely on sampling but uses 100% of the available and relevant data to:
- Obtain meaningful insights for investigative, legal, regulatory, anti-fraud or risk mitigation matters
- Assist internal audit and compliance teams to focus on potentially anomalous transactions across business functions and enhance their focus of reviews in times where costs are being heavily scrutinized
- Allow companies to continuously evolve and adapt internal policies and procedures to mitigate risk from the onset, leading to a proactive response to potential issues rather than reactive investigations after it happens
- Help companies quickly and efficiently identify any red flags that suggest they should be on guard for potential ABAC policy breaches
- Quantify the actual impact of fraudulent behavior and identify the amount of revenue generated from kickbacks for potential FCPA or UK Bribery Act violations, minimizing the assessment of fines by regulators
Three commonly raised reds flags from using FDA
- Multiple suppliers with same address
Shared or similar addresses, contact details or bank accounts are potential red flags, as are overly close relationships within a small group of local vendors.
- Multiple payments just below authorized level
Examples of this type of red flag include: evidence of unusual data trends such as split payments to bypass approval thresholds, large numbers of one-time vendor payments to bypass supplier due diligence procedures, duplicate payments, lack of proper supporting documentation around vendor set-up, diligence or payments, and multiple duplication in vendor master files.
- Generic description of expense reimbursement claims
Text mining within databases to identify “concepts” or generic descriptions can further focus on high-risk transactions.