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Using Analytics to Detect Possible Fraud: Tools and Techniques by Pamela S. Mantone

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Chapter 8

Grading the Four Companies

After going through all of the techniques and tools discussed within the pages of this book, the case studies require summation, with each company given either a passing or a failing grade. It is relatively straightforward to summarize testing outcomes, as the financial forensic examiner need only keep a scorecard as tests are completed. The failing grades should point to areas with unusual variations, unusual relationships, or excessive variability in the financial statements from period to period that suggest the possibility of fraudulent activity. Naturally, the next step in the investigative process includes the gathering of sufficient evidence for prosecution. Here are a few points to remember about analytical tools and techniques:

img Analytical procedures, by themselves, are not sufficient evidence for prosecution.
img Not every test within the scope of this book is necessary for every engagement.
img Use multiple techniques.
img Apply results of these tools and techniques to benchmarks.
Financial records are not always inclusive of all transactions, ...

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