This paper provides the theoretical review of the fraud risk characteristics, systematization of the existing fraud knowledge and the causes of fraud occurrence. Moreover, it determines the roles and the responsibilities of managers and auditors in the fraud risk assessments. In addition, risk factors relating to the misstatements arising from fraudulent financial reporting have been examined. ...

Loan fraud is a critical factor in the insolvency of financial institutions, so companies make an effort to reduce the loss from fraud by building a model for proactive fraud prediction. However, there are still two critical problems to be resolved for the fraud detection: (1) the lack of cost sensitivity between type I error and type II error in most prediction models, and (2) highly skewed di...

The concept of a “Fraud Triangle” is introduced to the professional literature in SAS No. 99, Consideration of Fraud in a Financial Statement Audit. The Fraud Triangle consists of three conditions generally present when fraud occurs: Incentive/Pressure, Opportunity, and Attitude/ Rationalizations. Input from forensic experts, academics and others consistently show that evaluation of information...

An accredited biennial 2012 study by the Association of Certified Fraud Examiners claims that on average 5% of a company’s revenue is lost because of unchecked fraud every year. The reason for such heavy losses are that it takes around 18 months for a fraud to be caught and audits catch only 3% of the actual fraud. This begs the need for better tools and processes to be able to quickly and chea...

One of the recent strategies for increasing the customer’s loyalty in banking industry is the use of customers’ club system. In this system, customers receive scores on the basis of financial and club activities they are performing, and due to the achieved points, they get credits from the bank. In addition, by the advent of new technologies, fraud is growing in banking domain as well. Therefor...

Now a day the usage of credit cards has dramatically increased. As credit card becomes the most popular mode of payment for both online as well as regular purchase, cases of fraud associated with it are also rising. Various techniques like classification, clustering and apriori of web mining will be integrated to represent the sequence of operations in credit card transaction processing and sho...

With the ageing of the population, and increasing demand for individuals to be financially literate and self-sufficient, older Australians may find themselves at greater risk of fraud. Although the proportion of the elderly experiencing fraud is lower than for those aged less than 65 years, this is the crime they are most likely to experience and the effects can be devastating as the elderly ar...

Data mining techniques are providing great aid in financial accounting fraud detection, since dealing with the large data volumes and complexities of financial data are big challenges for forensic accounting. The implementation of data mining techniques for fraud detection follows the traditional information flow of data mining, which begins with feature selection followed by representation, da...

In this paper we consider the application of a naïve Bayes model for the evaluation of fraud risk connected with government agencies. This model applies probabilistic classifiers to support a generic risk assessment model, allowing for more efficient and effective use of resources for fraud detection in government transactions, and assisting audit agencies in transitioning from reactive to proa...

Due to today’s advancement in technology and businesses, fraud detection has become a critical component of financial transactions. Considering vast amounts of data in large datasets, it becomes more difficult to detect fraud transactions manually. In this research, we propose a combined method using both data mining and statistical tasks, utilizing feature selection, resampling and cost-...