experience perspective // 

CPAs & ADVISORS

STATE INTERNAL AUDIT ADVISORY BOARDPresented by Jeremy Clopton, CPA, CFE, ACDA

experience perspective // 

CPAs & ADVISORS

DATA ANALYTICS FOR FRAUD DETECTION

2 // experience perspective

3 CRITICAL MESSAGES1. You should be using data analytics

2. You have the capability to perform data analytics

3. This session will help confirm points 1 & 2

3 // experience perspective

…processes & activities designed to obtain & evaluate data to extract useful information and answer strategic questions...

WHAT IS DATA ANALYTICS

4 // experience perspective

Where is fraud occurring in my company or organization?

TODAY’S STRATEGIC QUESTION

5 // experience perspective

CONSIDER THE FOLLOWING…

6 // experience perspective

Source:  Report of Investigation ‐ Office of Tax and Revenue Investigation Special Committee – District of Columbia

experience perspective // 

CPAs & ADVISORS

7 REASONS TO USE DATA ANALYTICS

7 // experience perspective

SAMPLING IS NOT EFFECTIVE

Reason #1

8 // experience perspective

You’re not likely to find the needle unless you look at the entire haystack.

KEY TAKEAWAY #1

9 // experience perspective

DATA RESIDES IN MULTIPLE SYSTEMS &

MULTIPLE TABLES

Reason #2

10 // experience perspective

11 // experience perspective

The most powerful feature of data analytics software is the ability to compare data from multiple systems and/or sources.**

KEY TAKEAWAY #2

12 // experience perspective

**My personal opinion; not a proven fact.

SHORTAGE OF THUMBTACKS & YARN

Reason #3

13 // experience perspective

14 // experience perspective

Employer

UPS Store

Employee Home

15 // experience perspective

16 // experience perspective

Analytics can help find relationships based on multiple attributes.

KEY TAKEAWAY #3

17 // experience perspective

NO AUDIT PROGRAM TO IDENTIFY “KICKBACKS”

Reason #4

18 // experience perspective

Relationships, patterns and trends are key areas for fraud detection. These aren’t in the APG.

KEY TAKEAWAY #4

19 // experience perspective

DOUBLES AS A PREVENTATIVE MEASURE

Reason #5

20 // experience perspective

Paper‐based & limited electronic testing 

(Sampling)

Data Analytics(100% coverage, ad hoc 

electronic testing)

Continuous Auditing(Automated analytics, 

100% coverage)

Reactive ProactiveResponsiveness

21 // experience perspective

Continuous auditing is data analytics at the speed of business.

KEY TAKEAWAY #5

22 // experience perspective

INVESTIGATORS USE DATA ANALYTICS

Reason #6

23 // experience perspective

Investigators have developed analytics for years. With development comes resources and a shorter learning curve for you.

KEY TAKEAWAY #6

24 // experience perspective

7% OF FRAUD FOUND BY ACCIDENT

Reason #7

25 // experience perspective

26 // experience perspective

Fraudsters are intentional about fraud; we need to be intentional about finding and preventing it.

KEY TAKEAWAY #7

27 // experience perspective

experience perspective // 

CPAs & ADVISORS

DATA ANALYTICS & YOUR COMPANY

28 // experience perspective

A GAME PLAN

29 // experience perspective

experience perspective // 

CPAs & ADVISORS

6 STEP PROCESS TO ANALYTICS

30 // experience perspective

Assess Risk

Define Objectives

Obtain Data

Develop & Apply Procedures

Analyze Results

Manage Results

31 // experience perspective

CHALLENGE TO CONSIDER – DATA QUALITY

417-865-8701, (417)865-8701, 8658701, 417-8658701

Missoura, MO, Mis, Miss, MZ, MS, Miz, Mizz

PO Box 34, P.O. Box 34, Box 34, Bx 34, P.O Box 34

Clopton, Clapton, Clompton, Clampton, Cloptin

12345, 12345a, 12345-1, 012345

32 // experience perspective

PROCEDURE DEVELOPMENT

Single‐Purpose (Individual) Tests

Groups of Similar Tests

Repetitive Individual Tests

Automation of Groups of Tests

Groups of Repetitive Similar 

Tests

33 // experience perspective

experience perspective // 

CPAs & ADVISORS

CLOSING THOUGHTS

34 // experience perspective

3 CRITICAL MESSAGES1. You should be using data analytics

2. You have the capability to perform data analytics

3. You now believe points 1 & 2

35 // experience perspective

RESOURCES• IIA Global Technology Audit Guides Continuous Auditing Fraud Prevention and Detection in an Automated World Data Analysis

• ISACA White PaperData Analytics – A Practical Approach

• http://www.acl.com• http://www.audimation.com

36 // experience perspective

Jeremy Clopton, CPA, CFE, ACDASenior Managing ConsultantBKD, LLP Phone: 417.865.8701Email: jclopton@bkd.com

Social MediaBlog: bkdforensics.comTwitter: @j313LinkedIn: http://www.linkedin.com/in/jeremyclopton/

37 // experience perspective

THANK YOU

FOR MORE INFORMATION // For a complete list of our offices and subsidiaries, visit bkd.com or contact:

Jeremy Clopton, CPA, CFE, ACDA// Senior Managing Consultantjclopton@bkd.com // 417.865.8701