Developing A Fraud Detection System In NetSuite

How ERP helps fight Fraud?

ERP is a readily available technology that is capable of handling multiple levels of fraud. 

Prevention is welded into the core of ERP systems. They provide a 360° approach and provide insights into everyday operations. Opportunists are likely to shy away from these air-tight procedures and risk direct exposure. 

Automation is another way to fight fraud and ERPs maintain a clear audit trail, unlike manual systems. Also, various types of approval mechanisms and alerts can be built into these systems.

Advanced segregation is another key feature that makes ERP stand out in Fraud detection. Fraudsters typically find it hard to break into a system that has end-to-end control and stringent approval mechanisms.

Role-based security is another great mechanism in ERP. It helps in controlling and setting limits for employees based on their processes and job role. This will prevent them from looking into sensitive areas and loopholes in the business process. 

Although, these were meager measures in our case, as the condition was similar to “A Thief Guarding The Bank”.

Requirements

The organization was hoping to find a solution that allowed them to monitor the changes in transaction records instantly and know about any unauthorized changes made.  

For instance, the “unit price” in a sales order refers to the price per unit as per the price level that is defined for the customer by the company in the item record. This is an automatically populated value in a Sales order as per the configuration. 

Any mismanagement or violation in these records could adversely affect the collective effort taken by the organisation. Our client required a system that can instantly notify them in case of any malpractices. 

But in this case, employees were deliberately changing the value of the auto-populated unit price to win a business that ultimately benefits them. 

Developing such a system can unveil the “black sheep from the family”.

Solution 

Developers at Jobin & Jismi solved the crisis by designing a fraud detection system using suite scripts that can check and report higher officials by triggering an email and a dashboard alert whenever a transactional record is created or updated to a rate less than the item record unit price or zero value is entered. Thus, they can conduct close monitoring on those employees. 

To make this happen, our team of NetSuite experts developed a functionality that can detect any unauthorized changes made in particular fields of transactional records. As a result a new entry will be recorded in the system and a notification will be sent to selected recipients about the new edit or entry both as a mail and dashboard alert.  This acts as a quick detection system against fraudulent activities. 

The primary conditions in the process that trigger alert are the following; 

1. Bill Credit: Any actions like move, delete or void, or alter the Bill Credit records.

2. Purchase Order: Any change in the value or delete the value.

3. Sales Order: Any un-authorized sales which is below-cost or zero cost.

4. Credit Memo: Change or delete the value in the Credit memo.

5. Invoice: Change or delete an item in low cost.

6. Inventory Movement:  Malpractices in the Inventory transfer or adjustment or change.

7. Payment received: Any Change, edit, or deletion in the payment received record.

Result 

As a result, the sales order discrepancies came to an end and the client had an effective fraud detection system in place. They now have line-level visibility over each of their transactions thus leaving no room for doubt. The final result was that the company was able to save up to USD3000 per month. 

Make an appointment with our experts at Jobin & Jismi if your organization faces similar challenges.