SAN JOSE, Calif., June 6, 2016 /PRNewswire/ --
- FICO® Falcon® Assurance Navigator uses analytics to identify and mitigate risk in federal grant spending
- Stanford University's input continues to shape the product, which they are now using
- New product uses proven analytics methods pioneered in FICO Falcon Fraud Manager, which protects 2.6+ billion payment cards worldwide
Analytic software firm FICO today announced that Stanford University is using FICO® Falcon® Assurance Navigator, a new product aimed at monitoring all procurement spending and discretionary expenses for indications of policy and regulatory non-compliance. The product gives public and private universities a better way to ensure compliance with internal policies and government regulations around the use of federal grant dollars.
More information: http://www.fico.com/en/products/fico-falcon-assurance-navigator
All university departments have to properly manage expenses and exercise sound fiscal stewardship, but the stakes are higher when it comes to managing federal award dollars. In December 2014, Circular A-81 from the US Office of Management and the Budget took effect, with new rules aimed at strengthening oversight of federal funds to reduce fraud, waste, and abuse. In addition, auditors are beginning to apply more sophisticated, data-driven approaches to identify misuse of public funds.
The complexity of managing grant dollars and the potential under A-81 for a growing volume of financial transactions needing review and documentation led Stanford University to proactively engage with FICO to explore an analytics-driven solution to address this problem, which will be faced by many leading universities.
"University transaction volume has grown too great to assess every transaction with manual staff reviews," said Ben Moreno, chief procurement officer at Stanford University. "We have high standards that have to be met through a smarter, more efficient solution. We need to protect our eligibility for future grants and our ability to provide a safety net to protect the University against fraud, waste, and abuse by putting the right system in place. We worked with FICO to build a groundbreaking, analytics-based system to give us the control we need over all our grant-related spending."
"This is a big problem – the federal government distributes $600 billion a year in grant awards to educational institutions, government agencies and other non-profits," said Doug Clare, FICO vice president for product management. "Getting grant spend and related expenses right is more than just a cost issue, it's also about protecting the reputation of the organization. If not done right, an organization risks losing federal grant money and could find itself on the front page of the newspaper for the wrong reasons. Stanford took a leadership role in this issue, and we used our work with them to develop a product for all grant recipients and private sector organizations looking to strengthen financial oversight."
FICO Falcon Assurance Navigator leverages FICO's 25 years of experience in detecting anomalous financial transactions and developing complex outlier detection algorithms, which have made FICO® Falcon® Fraud Manager the global leader in card fraud protection. Falcon Fraud Manager protects more than 2.6 billion payment cards worldwide.
Whereas most universities today monitor only a sample of transactions, Falcon Assurance Navigator monitors 100 percent of spend activity. Each transaction is analyzed using two different forms of analytics. The first method relies on expert-driven rules to assess each transaction against university policies as well as federal grant guidelines. The second analytic method applies algorithms designed to identify outlier behavior and rank-order transactions based on potential risk severity. For example, airfares that are not compliant with university policies represent frivolous use of university money. Noncompliant or excessive airfare can jeopardize millions of dollars in future awards and damage a university's reputation. Naturally, noncompliant transactions using federal funds receive higher risk scores that reflect their higher priority.
Falcon Assurance Navigator has modules for purchase requisitions and orders, invoices, expense reimbursement (e.g. travel and entertainment spend), and purchasing cards. The system incorporates a robust case management application and text analytics, including optical character recognition for receipts and other documents, and complex analysis of key words contained in free-text fields. Each module allows for the insertion of one or many domain-specific rule sets, and users can create queues for case review, approvals and routing.
"Our breakthrough with Falcon Fraud Manager more than 20 years ago was using proprietary analytics to monitor all card transactions," Clare said. "We helped card issuers drive down fraud losses by two-thirds. This approach can have the same impact on procurement and expense control."
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 165 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.
Learn more at www.fico.com.
FICO and Falcon are trademarks or registered trademarks of Fair Isaac Corporation in the US and other countries.
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