Investigation |
Forensic accountants perform a variety of investigations. The exact process followed from one investigation to the next will never be the same.
However there are themes that remain consistent like objectivity, impartiality and clear and concise communication.
We have also found that when planning an investigation, there are almost always three phases that are passed through. These are:
- Phase 1 – Pre-investigation
- Phase 2 – Investigation
- Phase 3 – Reporting and recommendations
In the last newsletter we outlined the first phase. In this newsletter we will touch on phase two – planning the fieldwork, from a fraud investigation perspective. This information should be useful for those who become involved in any kind of investigative process.
Phase Two – Investigation
Having completed the pre-investigation planning, the next step is to plan the field work associated with the investigation itself.
The next steps when leading a fraud investigation include:
- Reviewing the internal control system to determine what compliance (or non-compliance) with the system exists.
- Assessing the probable level and extent of complicity within the organisation. (This can be critical to ensure that the forensic accountant does not provide information to, or obtain misleading information from people involved).
- Ensuring the investigation team has the knowledge, skills and disciplines necessary to carry out the investigation effectively. Qualifications should include professional certifications, such as Certified Fraud Examiner, accounting/legal, reputation, and absence of complicity with those being investigated.
- Designing a procedural methodology that will identify the perpetrators, the extent of the fraud, techniques used, and the causes.
- Coordinating activities with the client and their legal advisors and other specialists, as appropriate, throughout the investigation.
- Being aware of the rights of the alleged perpetrators and personnel within the scope of the investigation and the reputation of the organisation itself.
As the investigation phase is carried out, it is important to regularly review results against the original pre-investigation hypothesis. In particular it is important to keep a focus upon how the fraud was committed and then who could have committed it.
Evidence
The way documentation that is suspected to be part of the fraud is identified and handled is critical. If in doubt documentation should be secured.
A number of investigators have found to their dismay that computers or documents that may have been used in a fraud were left with the intention of coming back to secure them later, only to find that the documents had been altered or had disappeared altogether.
Once a fraudster is alerted that there is suspicion, it is likely that operations will be shut down and protective measures taken (usually pre-planned for the event) to secure or destroy incriminating documentation.
Finally, if in doubt, the security of documentation and associated evidence should be discussed with legal counsel. Under no circumstances should original documentation be edited or notated by the investigators.
For more information about the investigation process please contact:
Barry Jordan
Partner, Forensics and Recovery
Lorinda Kelly
Associate Director, Forensics
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