The Oklahoma Office of Management and Enterprise Services (OMES) conducts multiple administrative investigations each year to ensure policies are being followed, and to ensure programs are used in an ethical, economical, equitable and efficient manner. Auditors rely heavily on data analytics software to electronically examine 100% of available data, which are often millions of transactions, to reduce fraud, waste, mismanagement and abuse.
- Strategic initiative to move away from traditional audits towards statewide audits of all agencies
- Analysis of 100% of data provides sufficient details to conduct through investigations
- Created a culture of statewide compliance and reduced purchasing card fraud by 99.999%
The OMES wanted to move away from traditional auditing where only a few agencies or divisions would be audited using sampling methods towards conducting more comprehensive analysis of all available data. To accomplish this, OMES auditors selected CaseWare IDEA® to help them analyze 100% of data to identify potential fraud or errors within complex transactions and calculations.
The OMES uses a predetermined set of databases, with varying file types, and imports the data directly into IDEA for analysis. For example, auditors search for conflict of interest within vendor contracts. They obtain the vendor database, employee database, claims, corporation filings and purchasing database. A Join is performed to combine all the databases, and the IDEA Fuzzy Match feature is used to identify similar records that may indicate conflict of interest. Auditors are able to provide the agency with specific data, including transaction details and amounts, to conduct thorough investigations.
Auditors perform comprehensive audits to identify bid rigging, purchasing card (p-card) misuse, overbilling, theft, time and leave fraud, ghost employees, kickbacks, misuse of authority and other infractions. A mix of data analytics techniques is used to analyze data including:
- Benford’s Law to analyze transactions using a third-digit test to uncover anomalies, and drill down into the data for details
- Link analysis to identify employees who have access to multiple databases
- Full and false inclusion testing to verify the presence or absence of information from reports
- Gaps within data, such as omitted records and missing vendor details
- Stratification and summarization to identify split purchases
- Chart analysis to analyze vendor spending over time and search for increases in volumes
- Expectation analysis to identify areas where data patterns are irregular and requires further investigation
Using a purpose-built data analytics tool has helped staff complete most investigations within two weeks or less. The quick turnaround of results allows agencies and departments to handle investigations internally, increase controls and build a stronger culture of compliance. With IDEA, auditors can examine large, complex data quickly and drill down into the results to uncover root causes or instances of fraud. As a result, they have reduced p-card fraud by 99.999%, and taken a more proactive approach to fraud prevention.
The OMES has worked to build a solid fraud program with preventative training and awareness, conducting regular risk-based audits, digital monitoring, and implementing an automated (anonymous) fraud and abuse reporting application. More frequent and comprehensive audits have helped reduce fraud, waste and abuse statewide.
“Fraud is always changing. When every agency and division knows we are conducting statewide audits and analyzing all the data, it creates a culture of compliance. With IDEA, we’re able to perform comprehensive audits quickly and pinpoint areas where there are issues.”
- JoRay McCoy, Director Audit and Internal Investigations, OMES