What Tools to Invest In

Accounting statement fraud is hard to catch, typically requiring specialized anti-fraud tools and an understanding of how fraudsters think. In this second installment on accounting fraud, a panel of experts discussed the tools available and why you need fraud expertise to build an effective system.

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Unfortunately, there is no AI model built for financial statement fraud, said Alexis Bell, CEO at Fraud Doctor. “In order to conduct supervised learning for financial statement fraud, you need to have large data in order to be comfortable that you have trained it enough, but there is not enough voluminous data,” Bell said. “So you are left with practitioner knowledge and a rule-based program.”

The secret to fraud detection is not technology. “Most financial investigators are not necessarily technologists, and if you are approaching this as a technology problem, you won’t necessarily have the background,” said Steve Hindle, founder of consultancy Achilles Shield. “If you approach it as a financial problem and bring technology to automate that, then things will be better.”

Meanwhile, the U.S. Department of Justice is leveraging data analytics to identify suspicious activities, said Stephanie Siegmann, litigation partner at Hinckley Allen and a former federal prosecutor with over 20 years of experience investigating complex national security and financial crimes.

“If you think no one’s going to catch you doing something, there is data analytics being used by DOJ to identify all types of fraud,” Siegmann said. “So, if you think something is wrong, your best option is to hire an attorney if you don’t already have one, and do an internal investigation with folks who have experience.”

In this video interview with Information Security Media Group, the panelists also discussed:

• Why not many vendors are exploring this type of fraud;
• DOJ’s stand on accounting fraud;
• How the marketplace is expected to evolve.

Want to learn more about accounting fraud? Read Accounting Fraud: Why Can’t the Industry Get It Right?

Siegmann is a litigation partner at Hinckley, Allen & Snyder LLP and serves as the chair of two of Hinckley Allen’s practice groups – international trade and global security and cybersecurity, privacy and data protection. She is a former national security chief and federal prosecutor and a U.S. Navy veteran.

Hindle is an industry leader, presenter, change agent and champion for diversity and empowerment. He has a reputation for delivering a solid foundation of trust and resilience.

Bell founded Fraud Doctor to help companies better understand and manage their fraud risk.