How To

How to Prevent and Detect Fraud

Stopping financial fraud requires a layered security approach and good detection tools. A Q&A with Mike Osborne, senior security manager at Kimberly-Clark.

By Derek Slater, Mike Osborne

Page 2

Q: Are software and technology providers making any advances in fraud detection?

A: Numerous software companies have designed products that perform fraud tests on real-time, daily transactions. They can also conduct tests on historical data. This software attaches to a company's systems for accounts payable, accounts receivable, expense reporting or any system that conducts financial transactions. Tools can examine every transaction (both financial and administrative) and run each transaction against a series of tests. The more common indicators of fraud include a vendor address that is the same as an employee address, duplicate invoice numbers and multiple changes in vendor identity fields. Most of the software currently available runs approximately 100 tests per transaction. These automated daily reviews provide exception reports when a transaction is flagged. The software not only detects potential fraudulent activity but can also recognize legitimate mistakes. Companies with this type of software in place have saved tremendous amounts of money by identifying fraud early and by locating legitimate mistakes before payments are made.

Q: What's the interplay of financial fraud prevention and other security measures?

A: Proactive fraud detection programs, along with the other measures mentioned above, are part of a total security program aimed at protecting a company's assets. Security measures implemented by a company rely on each other to be successful. For example, a good fraud prevention program could not be successful without a computer security program in place or a focus on protection of intellectual property.

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