Data-Mining Software Helps Forensic Accountants Keep Litigation Costs in Check

David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation and fraud deterrence, litigation support, and forensic accounting services in Philadelphia and the Delaware Valley.

The use of special data-mining software in complex litigation support and forensic accounting cases can yield significant cost and time savings, according to a noted Philadelphia forensic accountant.

In most forensic accounting engagements, time is of the essence and, when litigation is involved, deadlines for discovery or accepting proposed settlement offers can become a major issue. If it normally takes several weeks to analyze large amounts of data, and the analysis produces no meaningful results, the use of data-mining software can be especially valuable in affording time to conduct alternate analyses.

David Anderson, principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides litigation support services and expert witness testimony in Philadelphia and the Delaware Valley, once had an engagement that required only one person working for three days as opposed to a team of two people working for several weeks to perform the analyses and obtain the results.

In this specific case, a multi-location retailer believed its controller may have been defrauding the company through a variety of means. It was suspected the controller was purchasing goods from the company without payment and making fraudulent payments to one or more of her own businesses through accounts payable.

The controller had been married multiple times and had been known by eight different names including alternate spellings. In addition, she had lived at six different addresses during her tenure as controller.

The investigator from Anderson’s office obtained an electronic copy of all company sales and accounts receivable transactions for the 10 years the controller had been with the company. This totaled more than 1 million transactions in upwards of 250,000 customer accounts.

Using specialized data-mining software, the investigator analyzed customer accounts and transactions for matches with any of the controller’s names or known addresses. The write-offs of any balances in such customer accounts also were reviewed.

This showed the controller had purchased goods through eight different customer accounts; a former spouse had purchased goods through two different customer accounts; and a former live-in boyfriend had purchased goods through yet two other customer accounts.

During further research of nonpayment account reductions in balance, it was discovered that, on 13 different occasions the controller had written and processed either credit memos or write-offs to these accounts. Each of these nonpayment account reductions was determined to be improper and had been processed without the proper approvals.

In addition, by subjecting the company’s vendor files to this same data-mining software, the billing and payment addresses of the company’s 1,200 vendors were compared with the known addresses of the controller. This revealed that payments had been made over several years to a consulting company with the same address as one of the controller’s known addresses.

As demonstrated by this engagement, the benefits of using specialized data-mining software in complex litigation support and forensic accounting engagements can be substantial and should be seriously considered in such cases for cost and time savings.

If you require the services of a forensic accounting expert in Philadelphia and the Delaware Valley for detailed analysis, litigation support, or any other reason, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support services, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson is a forensic accounting expert in Philadelphia with more than 30 years of experience in financial and operational leadership positions. He is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.  Anderson also has provided expert witness testimony in the Greater Philadelphia area and served as a forensic consultant on both civil and criminal cases.