Sapling Financial Consultants assists forensic accountants in their investigations using data analytics and data mining for large data sets.
More data is stored electronically than ever before in history. For businesses, this can be financial data, operational data, marketing data, customer data, vendor listings, sales transactions, email correspondence. As a result, we are seeing an increased number of auditors and accountants turning to data analytics to investigate trends and outliers in the data, to help them detect fraud and quantify damages.
Spreadsheet tools are no longer good enough to tackle this type of task. Our consultants are equipped with the capability of handling large data sets and analyzing them, by using tools such as SQL, C#, Python, and VBA, as well as having the technical ability to construct and conduct valid and defensible statistical tests, perform analysis, and interpret other’s analyses.
Some examples of leveraging data analytics and modelling to support forensic investigations are the following:
Bank Statement Digitization
A for-profit company engaged us for a project involving the conversion of the scanned PDF bank statements pertaining to the company’s bank accounts into usable Excel files. We used Optical Character Recognition to convert the scanned documents into text files and then scrubbed the data to eliminate the “junk” information contained in the statements (e.g. file headers, extraneous transaction comments, etc.), which were not relevant in the data analysis process, and tagged specific transaction types. We ran extensive quality control tests to ensure the integrity of the financial records, such as checking (1) the consistency of Checking Summaries, (2) the ending balance consistency of each statement, and (3) ensuring that the opening balance + transactions = daily ending balance. The data was used to support the reconciliation of the company’s customer payments against the company’s billing system and detect possible instances of fraud.
Modelling for Tax Negotiation
A multinational company used Sapling’s analytics and financial modelling services in a negotiation process with a regional government regarding the taxes that the company-owned. We developed a dynamic model that calculated the company’s revenues based on both accrual accounting and cash accounting methods. The model featured dynamic scenario analysis, allowing varying market pricing, which enabled rapid analysis of various scenarios during the negotiation process.
Investigation of Cyber Security Breach
We investigated a data breach for a professional services company, focusing on determining the individuals affected by the breach as well as the risk profile for each individual affected. The breached data was a combination of structured (payroll records, benefits records, etc.) and unstructured data (email communications, notification letters, etc.). Using the combination of structured and unstructured data, we identified the unique individuals that were affected by the breach, as well as the personal information that was breached (name, social insurance number, date of birth, address, etc.), and generated a list of the breached information by individual for notification purposes.
Insurance Claim Support
A financial institution looking to file an insurance claim engaged us to quantify the net loss of their investor funds due to fraud. We analyzed years of financial transaction data, tracing all the investor funds deposited by various parties and redemptions and returns received by investors after certain key dates. Using a FIFO basis, we determined the redemptions and returns that were made to investors prior to the occurrence of fraud and quantified the net loss to investors for the dates ensuing the occurrence of fraud. The analysis was used as support for negotiation with the insurance company.