SAS Institute has launched a locally-developed procurement fraud solution that uses analytics to help public- and private-sector organisations to detect fraudulent or wasteful expenditure.
Figures show that fraud is rampant around the world, as well as in South Africa. The South African economy has lost an estimated R700-billion from corruption in the last 20 years, with about 10% of procurement spend being lost to bribery and corruption.
A recent Price Waterhouse Coopers survey found that 59% of local companies had reported instances of procurement fraud.
The new tool from SAS uses analytics to proactivity monitor and detect potentially fraudulent activities. It also acts as a preventative measure as employees are less likely to commit fraud in the first place if they know information is being monitored.
The analytics engine taps business rules, anomaly detection, predictive analysis, text analytics, database searches and social networking to highlight areas where fraud could be taking place.
It identifies red flags such as relationship links, duplication of information, validity of information, chronological order of transactions, irregular transactions and ghost vendors.
“By turning the power of analytics to detecting procurement fraud, we can use a combination of features working in collaboration to recognise not only known patterns of fraud, but also new methods and processes for defrauding organisations that have never been seen before, or that are specific to that particular organisation’s processes and employees,” says SAS Institute’s William Lawrence.
“Predictive analytics for fraud detection can use geographic location, similar bank accounts, personal details of employees, unusual activities outside of the financial system (such as regular meetings with suppliers) and text analysis of the data contained in e-mails, to predict when and how fraud is likely to happen. This is a much better way of dealing with fraud and reducing financial losses than the old ‘pay and chase’ scenario.”
