Fraud Auditing

Optimal Auditing for Insurance Fraud*

This article aims at making a bridge between the theory of optimal auditing and current procedures applied to audit files in different markets where scoring is the instrument used to implement an audit strategy. The literature has not yet developed an optimal audit policy for the scoring methodology. Our application is meant for the audit of insurance fraud but can be applied to many other acti...

Data Mining Techniques for Auditing Attest Function and Fraud Detection

Data mining technique is a newly developed tool for statisticians, data analysts, and the management information systems community. It involves searching information through databases for correlations and other non-random patterns. In making business decisions, it is important to recognize patterns of data and relationships among variables in order to discover valuable information. The results ...

Uncovering Fraud in Direct Marketing Data with a Fraud Auditing Case Builder

This paper illustrates an automated system that replicates the investigative operation of human fraud auditors. Human fraud auditors often utilize fraud detection methods that exploit structure in database tables to uncover outliers that may be part of a fraud case. From the uncovered outliers, an auditor will build a case of fraud by searching data related to the outlier possibly across many d...

Optimal Auditing with Scoring: Theory and Application to Insurance Fraud

This article makes a bridge between the theory of optimal auditing and the scoring methodology in an asymmetric information setting. Our application is meant for asurance claims fraud, but it can be applied to many other activities that use the scoring approach. We show that the optimal auditing strategy takes the form of a "Red Flags Strategy" which consists in referring claims to a Special In...

SAS 99 consideration of fraud in a financial statement audit: a new auditing standard