Albrecht, Conan C. (2003), Computer-Aided Fraud Detection, Computing Science and Statistics, 35, I2003Proceedings/AlbrechtConan/AlbrechtConan.paper.pdf
Developments in technology have made new pro-active fraud detection techniques possible. One approach using technology that appears to be eective in detecting fraud is the combination of deductive reasoning and technology—--a method we call strategic fraud detection. This paper presents a model formalizing and describing the strategic fraud detection method and shows how the use of information systems provides effective ways to detect fraud.
The model includes the following six stages: (1) understanding the business, (2) identifying all possible frauds that could occur, (3) cataloging possible symptoms for each type of fraud, (4) using technology to gather data about symptoms, 5) analyzing and refining results, and (6) investigating identified symptoms. Two additional steps of (1) following up on suspected frauds and (2) automating fraud detection procedures are also discussed.
A case study applying the strategic method of fraud detection to find contractor-related frauds in a large oil refinery is presented. In this case, several frauds and other problems were discovered.
Finally, the paper makes a call for research into statistical algorithms and ratio analysis to be published in the fraud and accounting literature.