Final answer:
The three large steps under the proactive method of fraud detection, analogous to the scientific method, are asking the question, conducting research on existing sources, and formulating a hypothesis. These proactive steps are crucial for effective fraud detection and prevention within organizations.
Step-by-step explanation:
In the context of fraud detection within an organization, adopting a proactive approach is essential to identify and mitigate potential fraudulent activities effectively. The scientific method, a universal procedure for conducting research, shares similarities with the proactive steps taken to detect fraud. The three large steps in a proactive method of fraud detection that are analogous to the beginning stages of the scientific method include 1) asking the question, which in fraud detection would involve recognizing the signs or anomalies that may suggest fraudulent activity; 2) conducting research on existing sources, which translates into reviewing financial statements, audit reports, and other relevant documents to gather evidence; and 3) formulating a hypothesis, where, based on the information gathered, one would propose a plausible scenario of how the fraud could be occurring.
These steps are critical as they lay the foundation for a rigorous fraud detection process, which may involve modeling potential fraud scenarios, setting up detection controls, or engaging in further investigation. In practice, these systematic steps help organizations address risks by actively looking for signs of fraud before it escalates, thus safeguarding assets and maintaining the integrity of financial reporting.