Transcript snare.pptx
Application 2: Misstatement detection • Problem: Given network and noisy domain knowledge about suspicious nodes (flags), which nodes are most risky? Inventory Money from A/P to purchase inventory Accounts Payable Cash Bad Debt Non-Trade A/R Transfer from A/R, report revenue Revenue Orange Cty Revenue Los Angeles Accounts Receivable Revenue San Diego Revenue San Francisco Revenue Other 1 Application 2: Misstatement detection • Problem: Given network and noisy domain knowledge about suspicious nodes (flags), which nodes are most risky? Round-dollar entries Inventory Accounts Payable Many late postings Cash Bad Debt Non-Trade A/R Large number of returns Accounts Receivable Many entries reversed late in period Revenue Orange Cty Revenue Los Angeles Revenue San Diego Revenue San Francisco Revenue Other 2 Application 2: Misstatement detection • Solution: Social Network Analytic Risk Evaluation – Assume homophily between nodes (“guilt by association”) – Use belief propagation (message passing) – Upon convergence, determine end risk scores. – Details: See Ch. 9.3. 3 Application 2: Misstatement detection • Nodes in proximity of many flags will be marked as risky, nodes flagged in isolation will not. Revenue Orange Cty Inventory Accounts Payable Revenue Los Angeles Cash Bad Debt Non-Trade A/R Accounts Receivable Revenue San Diego Revenue San Francisco Revenue Other 4 Application 2: Misstatement detection • Nodes in proximity of many flags will be marked as risky, nodes flagged in isolation will not. Focus on staff posting to A/R from headquarters Inventory Accounts Payable Ignore A/P, no corroborating evidence Revenue Los Angeles Cash Bad Debt Non-Trade A/R Revenue Orange Cty Accounts Receivable Revenue San Diego Revenue San Francisco Revenue Other 5 Application 2: Misstatement detection • • • • Accurate- up to 6.5 lift Flexible- Can be applied to other domains Scalable- Linear time Robust- Works on large range of parameters Results for accounts data (ROC Curve) Ideal True positive rate SNARE Baseline (flags only) False positive rate 6