EXAMPLES OF FRAUDULENT
SCHEMES

WHY STOP-LOSS SOLUTION IS POSSIBLE

The fact is that while executing fraudulent machinations the thieves create forged documents. These documents inevitably contain logical mistakes that can be revealed by means of data analysis.

Stop-Loss system’s researches, based on data from different informational systems, are conducted on a set schedule. The analysis uses algorithms for detection of suspicious documents and a knowledge base of fraudulent schemes. If signs of frauds are detected, the system forms and sends a report to corresponding persons with a description of discrepancies and the indication of a supposed fraudulent scheme, based on "strange facts" found in documentation.

EXAMPLES

Fraudulent scheme: Overpricing

Generally, this scheme is widespread in trade companies where Purchase Department employees conduct negotiations with suppliers. As a result, a supplier provides his production at higher prices, while a Purchase Department's employee receives kickbacks. This scheme undermines profits and is extremely harmful during erosion of purchasing power.

Revelation of the scheme:

This scheme can be detected when analyzing data from Electronic Document Interchange system, to which every supplier sends his "electronic price-list". This way you can have a knowledge base for comparison of prices from different suppliers and revelation of overpriced purchases, receiving statistical data on who in the Purchase Department is more loyal to overpriced suppliers.

Fraudulent scheme: Matching payments

This scheme is marked by payments that were conducted for the same sums and to the same contract partners twice. In fact only one payment is received by contract partner, while the other is sent to a theft's account. For a cover-up on one of the rarely checked accounts, they make a record of acquisition from a major supplier. A payment to the supplier makes it possible to provide a supporting documentation.

Revelation of the scheme:

This type of fraud can be revealed through search of the payments for the same amount in accountant's system and comparison of such payments with bank statements, showing real receiver of the duplicate payment.

Fraudulent scheme: Overstating of norms of materials and supplies expenditure

This scheme is widespread on production sites and can be represented in growth of charged off volumes of materials during finished-product output. For example, communal kitchen cooks Ossetian Pies. Standard formula includes expenditure of 0,0027 kg of sugar for each pie. If technologist "slightly modifies" the recipe, making it 0,027 kg of sugar, this unobtrusive change allows to charge off an excessive ton of sugar a month. Then the accountant has to negotiate the supply of a ton of sugar with supplier and transfer him a payment. Now all participants of the scheme have their profits.

Revelation of the scheme:

It is possible to track changes in recipes or product sheets and to achieve this there must be standard samples, untouched by perpetrators. Another indicator is a significant change in materials’ expenditure statistics under insignificant changes in finished-product output. The scheme will be also identified by materials expenditure that goes ahead the date of its supply. Cost fluctuation that is not proportional to the growth of supplier's prices is another alarming signal.

Fraudulent scheme: Oversupply

Kickbacks from suppliers may provoke Purchase Department for creation of significantly bigger stocks of materials and products that it is required. Alternatively, oversupply prevents from executing control over goods safety, when loss of few units becomes barely noticeable.

Revelation of the scheme:

Remains management and automatic procurement systems, containing data on remains and turnover, come in handy in such situation. It is important not to entrust this data to managers that make purchase orders. It is essential to conduct analysis of discrepancies in statistical data on materials expenditure, products turnover and actual procurements, revealing indulging oversupply employees.

Fraudulent scheme: "Natural loss" of goods

There are norms for goods' charge off, related to shrinkage, natural deterioration (vegetables/fruits) or breakage (products in glass container). Frauds can manipulate these norm to the extent they can neatly attribute losses to such norms.

Revelation of the scheme:

If charges off in warehouse or trade systems are constantly in the upper limits (don't have ups and downs during different periods of time, e.g. seasonal), the most unusual charges off in terms of dates and numbers of operations can be verified. Frauds can prepare so-called schedule of such operations (once a week, a month) when they sum up, fitting the numbers to the norms.

Fraudulent scheme: Works' overrating

A thievish accountant can feather his nest by overrating works, rendered by your company to other legal bodies or entrepreneurs. For example, according to a Certificate of Completion, the cost of the works is 38 150 USD. When drawing up an invoice the accountant puts another sum, for example, 39 150 USD. It's not a big problem if someone notices it, the accountant simply explains the mistake by weariness, says he's sorry and remakes the invoice.

The losses are much bigger than 1000 USD when a company has to deal with great amount of such documents.

Revelation of the scheme:

It is easy to reveal this scheme by comparing sums in the invoice with Certificate of Completion, or with additional contracts and agreements where the volume of works and their prices are specified.