Effective Use of Integrated Decision Making: An Advanced Technology Model for Evaluating Fraud in Service‐Based Computer and Technology Firms

Most fraud‐detection models developed to date require the use of private information and focus on companies primarily in retail and manufacturing industries. In the wake of recent corporate failures, a broad spectrum of interested parties now uses publicly available information to monitor their investments. The central issue we raise in this paper is the ability of external parties to detect financial reporting fraud in service‐based computer and technology organizations by using publicly available information. Utilizing both financial and nonfinancial information, we develop a model that employs logical reasoning through the use of Excel® and fuzzy logic. We predict fraud in these firms with 76.7 percent accuracy.