A review of data mining-based financial fraud detection research

Dianmin Yue, Xiaodan Wu, Yunfeng Wang, Yue Li, Chao Hsien Chu

Research output: Chapter in Book/Report/Conference proceedingConference contribution

86 Scopus citations

Abstract

Nationwide, financial losses due to financial statement frauds (FSF) are mounting. The industry recognizes the problem and is just now starting to act. Although prevention is the best way to reduce frauds, fraudsters are adaptive and will usually find ways to circumvent such measures. Detecting fraud is essential once prevention mechanism has failed. Several data mining algorithms have been developed that allow one to extract relevant knowledge from a large amount of data like fraudulent financial statements to detect FSF. Detecting FSF is a new attempt; thus, several research questions have often being asked: (1) Can FSF be detected? How likely and how to do it? (2) What data features can be used to predict FSF? (3) What kinds of algorithm can be used to detect FSF? (4) How to measure the performance of the detection? And (5) How effective of these algorithms in terms of fraud detection? To help answer these questions, we conduct an extensive review on literatures. We present a generic framework to guide our analysis. Critical issues for FSF detection are identified and discussed. Finally, we share directions for future research.

Original languageEnglish (US)
Title of host publication2007 International Conference on Wireless Communications, Networking and Mobile Computing, WiCOM 2007
PublisherIEEE Computer Society
Pages5519-5522
Number of pages4
ISBN (Print)1424413125, 1424413125, 9781424413126, 9781424413126
DOIs
StatePublished - 2007
Event2007 International Conference on Wireless Communications, Networking and Mobile Computing, WiCOM 2007 - Shanghai, China
Duration: Sep 21 2007Sep 25 2007

Publication series

Name2007 International Conference on Wireless Communications, Networking and Mobile Computing, WiCOM 2007

Other

Other2007 International Conference on Wireless Communications, Networking and Mobile Computing, WiCOM 2007
Country/TerritoryChina
CityShanghai
Period9/21/079/25/07

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Electrical and Electronic Engineering
  • Communication

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