Time Dimensional Analysis: An Anti-Fraud Tool for Internal Auditors

The author states that space and time analysis tools are a valuable supplement to traditional internal control checklists in detecting fraud and that many audit software packages include these analysis tools. Several examples of frauds detected with analysis tools included a fire claim of $200,000 where fictitious invoices would have short-circuited traditional audit procedures but the space/time tool noted that inventory quantity claimed exceeded store capacity and a sophisicated three-way derivative trading scheme where the company broker was able to pocket money with a loss to the company of about $250,000. The author does sound a cautionary note regarding legal issues, especially if some of the questionable activities occurred outside the U. S.