University Financial Analysis Report: Fraud Investigation Techniques

This report delves into financial analysis and fraud detection, focusing on data analysis techniques and forensic accounting methods. It highlights the use of Microsoft Excel as a crucial tool for data manipulation and presentation, along with the application of Benford's Law for fraud detection. The report emphasizes the importance of training auditors in modern fraud detection techniques, particularly in handling large datasets and the implications of electronic data analysis. It also discusses the adoption of new technologies like XBLR reporting and the need for analytical processing tools to detect potential fraud within these systems. The report stresses the significance of electronic data analysis in the current technological landscape, providing a comprehensive overview of essential tools and methods for effective fraud investigation.

Financial Analysis
2017

1
By student name
Professor
University
Date: February 27 , 2018.
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Contents
Analysis…………………………………………………………………........................................................3
References.....…………………………………………………………….....................................................5
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Data Analysis and Reporting in case of fraud investigation with the help of forensic
accounting techniques
The most important tools that a company can use for data analytics and fraud investigation are-
 Microsoft Excel – It can be an effective tool that can help in effective analysis of data
with different features with respect to data presentation and manipulation present in the
same. Microsoft excel is a type of tool that everyone is familiar with and hence
manipulation and segregation of data in the same becomes easy. It is thus helpful for the
auditors to use the same (Alsagoff, 2010). It is one of the widely used tool when it comes
to data analysis and presentation by the companies and the auditors.
 Use of Benford’s Law- The auditors can make use of Benford’s law for effective
detection of the fraud. It is based on the concept that certain digits are more frequently
present on the data sheet in comparison to other sheets. For example, if in any data sheet
it is seen that 40% of the numbers start with 2, then the auditor can discuss the
background of the same and while checking the same, go for manipulation of the data.
The auditors need to identify such data sets that can follow the Benford discussion and
then apply the necessary techniques to identify the probable fraud elements present and
solution with respect to the same (Durtschi, 2004).
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 Guide to forensic accounting investigation- Based on the changes that have taken place in
respect to the new era of auditing and accounting, it is important that the auditors must be
thoroughly trained in detection of such frauds and proper knowledge must be provided to
the same. The internal and external auditors must be trained and concepts should be
developed in such a manner that it does not focuses only on the concepts or facts but also
on the practical application of the same. This will end up in providing a reliable resource
for future reference by the company. It is important that the auditors must be trained to
handle large amount of data resources that might be bound to larger issues given the high
use of internet and information technology in the processing of the same (Golden, 2006).
Proper knowledge and diligence will help in attracting better resources and will help in
establishing authority and responsibility in the long run.
 Analytical Processing for Forensic Analysis – Along with the advent of information
technology, many new methods and principles are being developed that can help the
auditors in effective detection of fraud and reduction of the same. To facilitate the
transfer of big data exchanges, and to improve the overall transparency of the financial
reports it is necessary that new technology with respect to XBLR reporting has been
adopted by the company. However, there are high chances of fraud occurring owing to
the use of computational resources. It is thus important that support tools must be
developed that will help in detection of fraud that will occur using these XBLR
technologies (Pereira, 2014). There have also been proposals for the introduction of an
extension of the LMDQL language, that will support the overall queries in case of XLink
and XML Schema, and relational databases. Thus, this overall growth in the use of
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information technology will serve a high-end purpose of making the entire function of
data analysis and fraud detection easier since now most of the files are developed on the
internet and there are very high chances of fraud occurring in those cases.
 Electronic data analysis – The overall advent of technology in recent times have given
birth to the concept of electronic data analysis by the companies and this concept is also
not new to the CPAs. Before there were not much need of such forensic data analysis but
the same has changed with improvement and development, management of huge amount
of data, more higher risk activities being taken place. All this makes it important that
auditors must have knowledge about electronic data processing that will make it viable
for the auditors to effectively detect any kind of fraud and report on the same in the long
run (Yadao, 2018).
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References
Alsagoff, N. (2010). Microsoft Excel as a tool for digital forensic accounting.
Chariri, A. (2017). FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING
WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1).
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), 617-632.
Durtschi, C. H. (2004). The Effective Use of Benford’s Law to Assist in Detecting Fraud in Accounting
Data. Journal of Forensic Accounting, 17-34.
Golden, T. W. (2006). A Guide to forensic accounting investigation. Hoboken: Wiley.
Pereira, A. C. (2014). Analytical Processing for Forensic Analysis.
Yadao, J. (2018). Forensic accountants and big data.
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