Find Fraud Schemes with Fraud Examiners’ Sentiment Analysis Technique
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Apr 2020

Fraud can be destructive to a business, especially as financial transactions and fraud schemes are becoming more sophisticated and complex with technology developments. Acknowledging the wide variety of threatening internal and external fraud schemes, including fraud by vendors, corruption and asset misappropriation projects is essential for detecting and deterring fraud.

On the authority of the Association of Certified Fraud Examiners (ACFE), an anonymous tip line (or hotline or website) is one of the most effective ways to detect fraud in organizations. Fraud losses were 50 per cent smaller at organizations with sites than those without. There are three factors that generally apply to fraud perpetrators and are explained in the fraud triangle framework, which is designed to teach the reasoning for fraud:

  1. Pressure
  2. Opportunity
  3. Rationalization

What is the Sentiment Analysis?

Sentiment analysis is also signified as opinion mining which relates to a person’s feelings, attitudes, and opinions. It is an analytical tool that involves creating a system to analyze data to examine the author’s emotions and ideas and other documents. It is focused on recognizing what people think or how they feel about something. This type of analysis can help fraud examiners in detecting existing fraud schemes. It also serves as a trending tool to look at areas of concern that might indicate individuals that are at risk for fraudulent or suspicious behaviour.

How Can Sentiment Analysis be Pre-owned to Discover Fraud?

Sentiment analysis incorporates a process called keyword spotting that provides for developing a list of keywords that relate to a particular sentiment. Fraud examiners hunt for affect words in employee emails or other communications as part of their manipulating his division’s described sales to meet company quotas. The examiner might run a record of keywords while evaluating the merit of the tip. Words like flexible, temporary, unreasonable and worried against the alleged party’s emails and, if there are positive results investigate the issues further.

Negative keywords can also identify potentially discontented employees using sentiment analysis. By searching for negative keywords, fraud examiners can identify cautionary signs of fraud. Fraud examiners should include which carry strong emotions while preparing a keyword list. There are many ways through which fraudsters might use acronyms to hide their fraud schemes.

Sentiment analysis is an excellent analytical tool; some cautions must be taken with its usage. Fraud examiners should gather complete evidence before coming to conclusions with all the investigating techniques. The fraud examiner must keep investigating further to determine if a fraud has occurred once emails or documents are flagged based on keywords.

Privacy Policies

Employee privacy rights might limit the ability to conduct sentiment analysis techniques in certain authorities based on some types of employee communications. Hence, legal counsel should always be consulted by the fraud examiners regarding any legal restrictions before undertaking any analysis of this type. Fraud examiners should ensure that the company has a policy stating that emails and other correspondence are the company’s property and can be reviewed by the company at any point in time.

Process of Detecting Fraud

The method of detecting the contextual polarity of the text includes sentiment analysis. It is a five-step approach and a strategy which is used to identify any area, and a template used by company executives and managers to help them establish control system designs to detect frauds in their everyday operations. Here is the five-step approach:

  1. Know the Exposures
  2. Know the Symptoms of Occurrence
  3. Be Alert for Symptoms and Behavior Indicators
  4. Build Audit Programs/Detective Processes To look for Symptoms
  5. Follow through on All Symptoms observed

Managers and personnel must first interpret the primary risks within their areas to detect fraud. If a department is managed and they do not have an idea where to start, start identifying fraud symptoms, build detection processes, follow-up and look into the communication of symptoms.

Once the risks are listed, you shall select the most relevant ones and establish what those risks would cast like in the books and records. From there, processes can be checked to evaluate whether they are allowing you to enable your departmental staff to detect the symptoms; if not, then it is time that you implement new processes.

Fraud examination services in Dubai are accessible at JAXA Chartered Accountants as we have in-house experts. The professionals are regulated under all Federal Courts in the UAE. We have a company of experts who can guide you well with Fraud examination and its reporting requirements. We also work with many large law firms and provide them with the needed support for disputes. Contact us today!