Deloitte & Touche Launches DTect(SM) Financial Fraud Investigation Service

New weapon to identify potential financial fraud and irregularities by analyzing mountains of electronic data in a fraction of the time

The Financial Advisory Services practice of Deloitte & Touche LLP, one of the nation's leading professional services firms, has launched DTect(SM) (pronounced "Detect"), a proprietary fraud investigation service designed to help companies quickly identify, track and analyze electronic and financial fraud indicators by sifting through massive amounts of electronic data in a fraction of the time expended by using existing conventional methods.

"Deloitte brought together a unique team to develop DTect. We involved forensic technology practitioners and forensic accountants from around the world in the development of the service. Many of these professionals are former law enforcement technologists with significant experience in the use of computers in economic crime investigations," said Peter McLaughlin, DTect National Product Line Leader.

DTect is a procedural-driven service created to analyze mountains of historical financial transactional data, such as sales, accounts payable, inventories, and employee compensation. It is designed to utilize thousands of analytical test algorithms, resulting in profiles that help to identify anomalies that could indicate financial fraud. These test algorithms are executed against client-supplied data, which result in a series of profiles that are scored and ranked according to client-specific risk measurements. The higher ranking scores indicate the most probable occurrences of potential fraud or abuse, and collusion of employees and vendors.

The DTect service does not rely solely on traditional sampling techniques but enables comprehensive testing of multiple aspects of financial transactions. Anomalies and trends are identified through DTect's unique scoring methodology, which is used to focus efforts on the highest risk transactions and entities. Other differentiators that set DTect apart from traditional software technology include the incorporation of third party data sources, analysis of the total population of records rather than only a sampling, and the ability to customize test scenarios to conform to specific client needs.

In developing DTect, Deloitte forensic professionals analyzed all types of frauds to identify distinguishing attributes. The investigators then created the tests, which can be applied to business processes, such as vendor, payroll and expense disbursements, to detect the presence of fraud characteristics. Each test generates a risk score, which is assigned to each vendor, employee or job category, invoice, or transaction that fails a test. High risk scores indicate anomalies in vendors and transactions. Deloitte investigators then work with their clients to explain and interpret results, to investigate and resolve anomalies, and to identify potential incidents of fraud.

McLaughlin affirmed that DTect is not an off-the-shelf software tool. "DTect is a service providing the sophisticated capabilities of our forensic professionals, who have years of investigatory experience using sophisticated technology products."

"DTect, in the hands of our skilled forensic technology professionals, is expected to have a major impact on how our clients investigate potential fraudulent activity involving huge amounts of electronic data," added McLaughlin. "DTect helps to eliminate precious days and expensive hours spent sifting through electronic information that may have no relevance to a particular case. More importantly, it assists our clients in quickly understanding what happened and helps give them necessary information to take decisive action in a crisis situation brought on by an act of fraud."

Forensic & Dispute Services is a service offering within Deloitte & Touche that uses DTect as part of its arsenal of fraud investigation technology. DTect is deployed at the request of clients who have retained Deloitte on a proactive basis, or for a forensic investigation engagement. In the course of an audit, Deloitte might discover fraud and suggest that its client take specific actions to address the potential issue. DTect can be deployed to assist in that process. DTect is a proactive fraud anomaly-detection service that has been very beneficial to our clients in assisting the CEO and CFO certifications required by Sarbanes-Oxley.


(04.09.2004)

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