Wizsoft presentation bdenker

							  Fighting Fraud With Software
   The WizSoft Approach for Auditors



IIA North Jersey Software
Expo
Presented May 17,2007
BOB DENKER,
CIA,CISA,CFE
Baruch College, CUNY
For WizSoft Inc.
Problems with data analysis tools


               Becoming    complacent
               Ignoring    ‘non-trivial’
               fields in testing
Fraud Testing Applications


           Insurance
           DueDiligence
           Money Laundering
           Human Resources
What are the data mining applications that
should draw the attention of the auditor?

  Human resources –
 1. employees earning salaries inconsistent with
    their title;
 2. employees not availing themselves of benefit
    programs (perhaps to maintain as much
    anonymity as possible);
 3. employees whose household address
    matches an address from the vendor file;
 4. employees appearing more than once on
    umbrella security file
What are the data mining applications that
should draw the attention of the auditor?

  Financial applications –
 1. (Money Laundering) - structured transactions
    (clients who make cash/travelers checks/money
    order contributions to annuities, single premium life
    insurance, IRAs, mutual funds, etc.) in aggregate
    amounts that exceed the US $10,000 reporting
    threshold;
What are the data mining applications that
should draw the attention of the auditor?

  Financial applications –
 2. clients making contributions to
    investment vehicles that are
    disproportionate to their income
What are the data mining applications that
should draw the attention of the auditor?


  Assistance in due diligence testing –
 1. by revealing the business rules, data
    mining tools can be used to train new
    auditors for new areas or new systems
    that are being audited for the first time;
 2. identical applications can be used for due
    diligence testing
What are the data mining applications that
should draw the attention of the auditor?



  Construction and purchasing –
 1. invoice for large purchases made at
    the end of the fiscal accounting
    period;
 2. price of goods inconsistent with
    industry costs
What are the data mining applications that
should draw the attention of the auditor?

  Medical/ dental applications –
 1. patient substitutions;
 2. over-utilization of specific diagnoses
    inconsistent with the patient population;
                Dental Fraud?


What   is a Sunday
Dentist?
Where   is your dentist?
What are the data mining applications that
should draw the attention of the auditor?

    Provider open seven days a week for
     disproportionate number of non-emergency
     procedures (could indicate provider is filing
     false claims and is spreading out the
     submissions to divert suspicion)
What are the data mining applications that
should draw the attention of the auditor?

    Excessive number of patients traveling great
     distances to a provider (could indicate
     provider utilizing a postal drop site);
UNCONDITIONAL RULES

1)   STATE is CA
     Rule's probability: 1.000
     The rule exists in 1015 records.

2)   PATIENT_ZIP is 92108
     Rule's probability: 0.993
     The rule exists in 1008 records.

3)   PROVIDER_ZIP is 90210
     Rule's probability: 1.000
     The rule exists in 1015 records.
     Data Auditing Tools

WizRule - business rules detector for data auditing,
 exposes suspected errors in the data.

WizWhy - analyzer and predictor for databases,
 reveals main patterns, interesting phenomena,
 unexpected cases, and predicts for new cases.

WizSame - reveals identical and similar records
 suspected as duplicates, in one or two data sets.

WizCount - performs account/bank reconciliations
 and finds all the one-to-many and many-to-many
 relevant combinations of matching transactions.
            WizRule

WizRule reveals the rules governing
 the data and points out cases
 deviating from the discovered rules.
 The deviating cases having the
 highest degree of unlikelihood are
 listed as suspected errors.
          WizRule

WizRule analyzes the data by
 revealing three types of rules:
 Formula rules
 If-then rules
 Spelling rules
               WizRule
WizRule issues three reports:
  Rule Report - lists the discovered rules
  Spelling Report - lists cases that are likely
  to be spelling errors of names or other values
  (cases to be audited)
  Deviation Report - lists the cases that
  deviate from the set of the discovered rules
  (cases to be audited)
Deviation Report
            WizRule
            Corporate users:
Audit Directors
Internal Auditors
Risk Managers
Security Officers
Financial Analysts
Consultants
              WizRule
         Business Applications:
 Fraud detection
 Internal audit
 IS/IT/EDP audit
 Risk assessment
 Special investigation
 Data quality improvement
 Reverse engineering for business rules
          WizSame

WizSame reveals similar and identical
 records suspected as being duplicate,
 based on the user's criteria.
WizSame analyzes one data set or
 compares two data sets.
          WizSame
 Reveals cases where records contain
  synonymous value (e.g. NY and New-
  York)
 The matching criteria may be defined
  by several conditions, connected by
  AND or OR operators
 Reveals matching records in a new
  table set that is to be merged in an
  existing table
Matching Set Report
        WizSame

Revealing duplicate records is
 mandatory to the auditing process:
 compare the Vendor List with the
  Employee List
 reveal duplicate invoices, payments
 reveal duplicate inventory entries
           In conclusion:
Auditors need to approach each audit with
an open mind and expect the unexpected.

Having additional software tools to
augment your traditional data analysis
tools is not a luxury but a necessity in
today’s complex audit world!

Thank you for your attention.
         Who Are They?
Fully owned subsidiary of WizSoft Ltd. (1983)
Headquarters in Tel-Aviv, Israel
US office in Syosset, NY
35,000 customers world wide
200 employees
18 sales and services offices


         516-393-5841
        www.wizsoft.com
                          Contacts
Irina Sered                          Scott Safara
Executive V.P.                       Technical Sales/Support
6800 Jericho Tpke., Suite 120W       6800 Jericho Tpke., Ste 120W
Syosset, New York 11791              Syosset, New York 11791
Tel: (516) 393-5841                  Tel : (516) 393-5841
Fax:(516) 393-5842                   Fax: (516) 393-5842
isered@wizsoft.com                   ssafara@wizsoft.com


                        www.wizsoft.com