Cook the Books and Book the Ledgers - Part 3

 

I read an article in an Association of Certified Fraud Examiners (ACFE) Magazine months back where a Duplicate check was initiated on a database of Defense Project Capital Work in Progress spends to build and set - up a Naval Reconnaissance Vessel overseas. The article went on to talk about the sheer volume of complex transactions being capitalised running into a few million line items from categories like Civil, Engineering, Electrical, Contractor, Gunnery, Armoury, Instrumentation and more.

 

By using the Duplicate check (Duplicate Key Detection if done in IDEA) the Naval Investigators were able to identify spends for the same amount within the same category like Civil, Engineering, Electrical, Contractor, Gunnery, Armoury, Instrumentation and more on different dates and same dates.

 

They also noticed spends for the same amount across different categories being made to the same Vendor / Contractor in the same month.

 

All this was being done to inflate the capitalisation amount and on investigating many of the duplicate spends it was noticed that these were illicit commission and / or kick-back payments being made to middle-men agencies to secure various contracts for the Vessel Management.

 

This got us thinking that can we not use the Duplicate features in IDEA to look for potential duplicates in Project Capitalization for our clients especially for non-Purchase Order based spends.

 

In the next post we look at capturing Red Flags in a Collection Management System where we identify a spurt in collections against near Overdue accounts towards the month end followed by reversal to the collections in the following month.

 

Best Regards

 

Group Admin Team