Evidence Preserving Forensic Accounting Advisory A Cost Sensitive Model for Financial Misstatement Triage

Abstract

Forensic accounting screens can generate substantial review burdens when the target condition is uncommon, even when assumed detection properties appear favourable. This paper develops an evidence-preserving and cost-sensitive advisory model linking alerts, corroboration, alternative explanations, case disposition, and review capacity. A purposive literature synthesis supports conceptual development, and deterministic sensitivity analysis evaluates explicitly hypothetical screening and economic assumptions. With 10,000 items, one percent prevalence, 80 percent sensitivity, and a five percent false-positive rate, the example produces 80 true alerts and 495 false alerts, giving 13.91 percent precision despite 94.85 percent overall accuracy. An illustrative expected-value calculation yields a 4.76 percent review threshold under its stated loss, recovery, cost, and harm assumptions. Changes in recovery, timing, or supported loss alter that threshold. These results concern an assumed target condition and do not establish fraudulent intent. The proposed method requires population reconciliation, preserved source records, reproducible transformations, separate loss schedules, and documented treatment of unresolved cases. Its contribution is a transparent link between analytical screening and authorised evidence review. Operational detection rates, investigative returns, and causal performance effects remain questions for empirical validation.