...a bit more on Forensic Investigations

When organizations discover fraud, sometimes they tend to panic. They will call the first forensic accounting firm on the telephone directory and give a brief that they require a forensic audit done in a week’s time or two weeks or in just a few days. The organization will expect the investigator to come up with names and potential loss within that time. Few investigators will turn down a job just because the turnaround time expected is short – and there lies the beginning of a not soo good experience/relationship between the client (the organization) and the forensic investigator. I will explain.

The nature of forensic investigations is to bring forth facts relating to a certain allegation(s). Research has shown that most fraud occurrences are not one off events. Fraudsters will start with one small amount (for whatever reason) and rationalize that they will pay it back or convince themselves that they deserve the money (equity). Off course, this never happens and at some point they will slip and be caught. The point of the foregoing is that in most cases fraud will have been going on for some time before it is discovered. People committing the fraud will have had a good grasp of the business process and know where they can exploit. The expectation that an investigator will be able to put together a case/report that can stand in court in a week’s time is unreasonable. In my experience such harried investigations end up destroying the case.

The most important aspect of any investigation is planning. You get this wrong and you end up with another internal audit report. Yes, time is of essence in any investigation to ensure that evidence is not destroyed – however securing of documents and the ‘crime scene’ should be well thought out. You do not want to alert your target before the time is right.

A good investigator should therefore be able to calm his client and ensure that they understand the implications of a hurried and unplanned investigation. Given that forensic investigations are expensive undertakings a good plan ensures that appropriate time is assigned to each activity and time is not spent going back to issues that should have been dealt with earlier……