Predicting the type of financial statement fraud

Fraud is a problem for the all kinds companies, both large and small. According to a study be Association of Certified Fraud Examiners could be even 5% of the whole world Gross Domestic Product leading to approximately $4 trillion losses. The financial statement fraud is the costliest form of fraud, when it occurs with a median loss of$800.000 per case. However, in 22% of the cases of financial statement fraud the loss is over $1.000.000. The problem is that the main way of finding fraud has been whistleblowing. There is a clear need of other effective methods to finding fraud. In case of financial statement fraud one can attempt to use artificial intelligence methods to predict whether a financial statement is fraudulent or not. Usually this has been studied using models, which only whether the financial statement is fraudulent or not. Here also the type of fraud is studied, so that one could start to use the information for predicting in which part of the financial statement the fraud is in. We use dataset combined from Audit Analytics and Compustat datasets from Wharton Research Data Services. The data is for years 1995-2016 and consists of prediction variables, which are formed using financial statement data and other public data for the companies. Altogether there are 347 fraudulent financial statements and 58.892 non-fraudulent financial statements in the final dataset. 9 different predictive models are formed using regularized logistic regression and 35 predictive variables. 1 predictive model is for fraud as a whole, 8 are for different fraud types. Finally a predictive model of fraud is built using 3 different fraud types and compared whether it produces better results than modelling fraud directly. Of the 35 predictive variables 7 turn out to appear in at least 8 of the 9 different models: whether new securities were issued, value of issued securities to market value, accounts receivable, accounts receivable to total assets, is the auditor one of Big 4, net sales and whether standard industry classification code is between 3000-3999 or not. The performance of the models to predict fraud or fraud type is measured using expected relative cost of misclassification, accuracy, precision, sensitivity, receiving operating curves and areas under the receiving operating curves. Receiving operating curves for fraud and fraud types are quite similar, so are their areas under the operating curves, which is 0,71 for fraud and 0,68 for the combination of 3 fraud types. The rest of the results depend on the prior fraud probability in the world, which is taken to be between 0,1% - 10%, and the ratio of cost of misclassifying fraud as non-fraud to cost of misclassifying non-fraud as fraud, which varies between 1:1 and 100:1. The accuracy, which measures the percentage of correct classifications among all cases, is between 80% - 99% for the combination of three types and 81% - 99% for fraud. The precision, which measures the percentage of correct fraud classifications among all predicted fraud cases, varies between 1,3% - 3,5% for fraud and 1,4% - 4,2% for the combination of three types, these numbers are low because of the huge imbalance between fraudulent and non-fraudulent cases. The sensitivity, which measures the percentage of correct fraud classifications among all the actual fraud cases, varies between 1,4% - 42% for fraud and between 1,7% - 48% for the combination of three types. The expected relative cost of misclassification for the combination of three types by -3,7% - +0,05% compared to fraud depending on prior fraud probability and relative costs of misclassification. The combination of three types perform better in predicting fraud than direct fraud prediction in most cases prior fraud probability and relative cost of misclassification

Very Large Primordial Non-Gaussianity from multi-field: Application to Massless Preheating

In this paper we derive a generic expression, which is valid for scales larger than Hubble radius and contains only the local terms, for the second order curvature perturbations for more than one field, provided the expansion is sourced by the energy density of a single field. As an application, motivated by our previous paper [1], we apply our formalism to two fields during preheating, where the inflaton oscillations are sourced by $\lambda\phi^4$ potential which is governing the expansion of the Universe. A second field $\sigma$, coupled to the inflaton through $g^2\phi^2\sigma^2$, is excited from the vacuum fluctuations. The excited modes of $\sigma$ amplify the super-Hubble isocurvature perturbations, which seed the second order curvature perturbations to give rise to a significantly large non-Gaussianity. Our results show that within 3 inflaton oscillations for a range of parameters, $1< g^2/\lambda < 3$, the non-Gaussianity parameter becomes: $f_{NL}\geq {\cal O}(1000)$, which is already ruled out by the current WMAP observation.Comment: 23 pages, JHEP style, references adde

Non-Gaussianity from Preheating

We consider a two-field model for inflation where the second order metric perturbations can be amplified by a parametric resonance during preheating. We demonstrate that there can arise a considerable enhancement of non-Gaussianity sourced by the local terms generated through the coupled perturbations. We argue that the non-Gaussianity parameter could be as large as f_{NL} ~ 50. Our results may provide a useful test of preheating in future CMB experiments.Comment: 4 pages ReVTeX4, discussion and references added, conclusions unchange

Supermassive gravitinos, dark matter, leptogenesis and flat direction baryogenesis

In general the gravitino mass and/or the soft supersymmetry breaking masses in the observable sector can be much larger than the TeV scale. Depending on the relation between the masses, new important channels for gravitino production in the early Universe can arise. Gravitinos with a mass above 50 TeV decay before big bang nucleosynthesis, which leads to relaxation of the well known bound on the reheating temperature $T_{\rm R} \leq 10^{10}$ GeV. However, if the heavy gravitinos are produced abundantly in the early Universe, their decay can alter the abundance of the lightest supersymmetric particle. Moreover, they may dominate the energy density of the Universe. Their decay will in this case increase entropy and dilute already created baryon asymmetry and dark matter. Such considerations put new constraints on gravitino and sfermion masses, and the reheating temperature. In this paper we examine various cosmological consequences of supermassive gravitinos. We discuss advnatges and disadvantages of a large reheating temperature in connection with thermal leptogenesis, and find that large parts of the parameter space are opened up for the lightest right-handed (s)neutrino mass. We also discuss the viability of Affleck-Dine baryogenesis under the constraints from gravitino decay, and gravitino production from the decay of Q-balls.Comment: 47 pages, 6 figures, JHEP styl

Flat direction condensate instabilities in the MSSM

Coherently oscillating scalar condensates formed along flat directions of the MSSM scalar potential are unstable with respect to spatial perturbations if the potential is flatter than phi^2, resulting in the formation of non-topological solitons such as Q-balls. Using renormalization group we calculate the corrections to the phi^2 potential for a range of flat directions and show that unstable condensates are a generic feature of the MSSM. Exceptions arise for an experimentally testable range of stop and gluino masses when there are large admixtures of stops in the flat direction scalar.Comment: 9 pages, 9 encapsulated postscript figure

Sound mining in the North : a guide to environmental regulation and best practices supporting social sustainability

Julkaistu versi

A mobile diary method for studying children’s and adolescents’ emotions: a pilot study

Researching children’s and adolescents’ emotions from their own perspectives possesses special requirements for the data collection tools used. In this study, children’s and early adolescents’ emotions were investigated using a mobile diary method. The article describes and evaluates this data collection method and presents empirical results on fluctuation in the emotions of children and adolescents (n = 60, aged 7–14 years). The data, in the form of short text messages, were collected over one week. Every evening, children received seven questions on their emotions. Multilevel modeling was used to analyze the data. The results illustrate the potential of the mobile diary method with children and early adolescents. The data showed a two-factor structure, indicating that the mobile diary method was able to reveal the underlying dimensions of positive and negative emotions. The study also showed that daily variation in emotions along with systematic differences between participants in their emotional experiences (related to, e.g., the form of the family) can be captured using the method

Impacts of a deep reactive layer on sedimentary phosphorus dynamics in a boreal lake recovering from eutrophication

Using biogeochemical analyses of sediments and porewaters, we investigate the legacy of a brief, intense period of eutrophication on sedimentary phosphorus (P) cycling in a boreal lake (Enonselka basin, Lake Vesijarvi, Finland). Point-source sewage inputs in the twentieth century caused deoxygenation of the lake and accelerated the focusing of iron (Fe) and manganese (Mn) oxides into deeper areas. Early diagenesis under Fe-Mn-rich conditions now favors rapid burial of P in these areas, likely as a combination of both oxide-bound P phases and authigenic manganous vivianite. A new P budget for Enonselka basin shows that P burial causes an annual drawdown of 1.2% (+/- 0.2%) of the surface sediment P inventory, supporting a long-term trend towards recovery since the construction of a wastewater treatment plant in the mid-1970s. However, remineralization of organic matter and associated dissolution of Fe-Mn oxides continues to regenerate P from a deep reactive layer (20-60 cm depth) deposited at the height of past eutrophication, leading to an upwards diffusive flux of dissolved phosphate towards the surface sediments. The magnitude of this flux is similar to that of external P loading to the lake. The combined incoming fluxes of P are likely to retard the complete recovery from eutrophication by decades, despite ongoing restoration actions.Peer reviewe

Constraints on self-interacting Q-ball dark matter

We consider different types of Q-balls as self-interacting dark matter. For the Q-balls to act as the dark matter of the universe they should not evaporate, which requires them to carry very large charges; depending on the type, the minimum charge could be as high as Q \sim 10^{33} or the Q-ball coupling to ordinary matter as small as \sim 10^{-35}. The cross-section-to-mass ratio needed for self-interacting dark matter implies a mass scale of m \sim O(1) MeV for the quanta that the Q-balls consist of, which is very difficult to achieve in the MSSM.Comment: 13 pages, 2 figure