Fraud Author Tracy Coenen

Simple cross-checking of computer data can yield important information, especially in large companies where it is impossible to know personal details about each employee. Management can select the measures that are most important to monitor, and the software can be set up accordingly.

For example, computer systems can be set up to cross-check addresses of vendors and employees. This could tip the company off to a fake vendor whose payments are being sent to an employee’s home. It could also reveal a ghost employee whose paycheck is being sent to a real employee’s house.

The software might also be set up to look for post office boxes or other addresses that don’t match the vendor’s address in the master file. This might signal a check that was sent to an alternative address by a dishonest employee or outsider, rather than the legitimate vendor.

It is also important to cross-check vendor names, looking for similar or related names. Employees have been known to duplicate a vendor in the accounting system, misspelling the name so the system doesn’t flag it as a duplicate. Checks issued to this vendor probably won’t draw any scrutiny from supervisors since it is a “known” vendor, but the employee using the duplicate name is free to take the check for personal use.

The software can also be set up to monitor the accounting system for unusual data. Such things might include an unusually high number of checks written for an amount just below the company’s threshold for additional authorization. The system could flag a high level of activity for a new vendor. The company may also be interested in seeing how often manual checks are cut instead of using the proper accounts payable procedures. Simple data analysis techniques can flush out a variety of suspicious items and transactions.