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Military Organization Payables Forensic Audit

Automated Auditors was retained by a military organization (to remain confidential) to conduct a forensic audit of their accounts payables, which were estimated at $135 Million annually. This client provides quality merchandise at discounted prices to its service men and women and funds many of the recreational programs enjoyed by its members. Using proprietary SAS algorithms, Automated Auditors successfully completed audits of duplicate payments, duplicate vendors, potential vendor fraud, and potential procurement-card (“p-card”) fraud. Rather than leaving our client to sift through several spreadsheets of data, we provided them with an executive summary outlining our methodology and findings.

Vendor File Maintenance

The controller for Middlesex County, NJ retained Automated Auditors to assist them in a complex vendor file cleanup project. Our client wanted a very specific cleanup process whereby duplicate vendors were identified separately from related vendors. Using our advanced data-matching process, we matched on name, address, and tax identifier / EIN to group like vendors together into vendor “families”, labeling them either firm duplicates or just related. This type of grouping exercise is called entity resolution / identity resolution, typically done using very expensive software, but implemented inexpensively by us. The client was very satisfied with the results and the timeliness of completion.

Large Hospital Payables Audit

Automated Auditors successfully completed a full Accounts Payable (A/P) audit for a large hospital in Southern California that identified vulnerabilities in the A/P system and generated quality fraud leads for further investigation. Among the algorithms run were: duplicate payments, duplicate vendors, vendor-employee cross-check, fictitious vendor identification, Benford’s Law, and cross-checking staff against medical exclusion lists. As a result of the audit, the controller was able to recoup duplicate payments, cleanse their vendor file, investigate leads generated, and put in place preventative measures to circumvent future leakages.

Dispute & Litigation Support

As a contractor to Bruce Dubinsky, managing director in the Governance, Risk, Investigations & Disputes practice of Duff & Phelps LLC, Automated Auditors provided data mining support for Case 02-Civ-1565 “Sensormatic Security Corp (SSC) vs. Sensormatic Electronics Corporation”, for which Bruce Dubinsky was retained as the expert forensic accountant via the plaintiff. The plaintiff, SSC, claimed that Sensormatic Electronics Corporation breached the franchise agreement by omitting to pay commissions on the sale of CCTV security equipment, and also by authorizing a third-party, ADT and Wallace, to operate in SSC’s franchise area. Commission calculations were processed using customized SAS algorithms, and Automated Auditors was retained to correctly interpret the SAS programs. Our firm was instrumental in reconciling actual sales commission data with expected commissions and detecting disparities between the two. The case eventually settled, with Tyco/Sensormatic purchasing SSC, the last franchise owner, for $81 Million.

OFAC List Data Matching

The Office of Foreign Assets Control (OFAC) publishes lists of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Automated Auditors has been hired by several clients to conduct OFAC list validation, which consists of matching a client’s payee names with the names on the OFAC list. Given the complicated nature of the OFAC list names and aliases, Automated Auditors was perfectly suited for this task by implementing our sophisticated fuzzy-matching software.

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