MBA 590 Chapter 6

MBA 590 Chapter 6 - Quentin Stephens MBA 590 10/01/08...

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Quentin Stephens MBA 590 10/01/08 Discussion Questions 1. It is important to proactively detect fraud because in being proactive, fraud can be detected early. Ultimately, by catching fraud early it can save a company money. 2. The differences between anomalies and fraud are that anomalies on one hand are not intentional and fraud is. Also, anomalies will be found through a data set, unintentional at that. According to the book fraud is an “intentional subverting of controls by intelligent human beings.” 3. The risk that is faced when sampling for fraud is that since a very small percentage of data is sampled, it is likely that some fraud will go undiscovered. 4. The advantages of his data software to detect fraud are because the software is able to look at the full populations instead of just samples, fraud detection can be done very quickly, 5. By using statistical analysis, it can be performed on a database of any size. Additionally, statistical analysis is best used with particulars types of fraud. Short Cases 1 1. The advantages and disadvantages of the data driven approach are that you can look at the whole population of what you are trying to find fraud in instead of just doing a sample. This is more proactive, which allows detection to be caught early instead of waiting for it to happen. It can also save money. The disadvantages of the data driven approach are that the proactive cost will initially be more expensive. Sometimes fraud can be lost in the details of large data sets. Additionally, the data driven approach may give mis signals. 2. This approach is a proactive approach, which aims to prevent fraud, and the reactive approach waits for the fraud to occur. Both approaches are acceptable, however the data given approach would be best for a company that was looking to detect fraud before it even occurs.
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Short Cases 2 1. Benford’s Law is a “mathematical algorithm that accurately predicts that, for
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MBA 590 Chapter 6 - Quentin Stephens MBA 590 10/01/08...

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