Litigation

Financial investigation best practices

By Tracy Coenen

I recently did a podcast for the International Association for Asset Recovery (IAAR), which is accessible to IAAR members on their site. One of the great questions asked by David Quinones, host of the podcast and Editorial Director for IAAR, related to best practices in financial investigations.

I talked about two of the best practices for fraud investigators and forensic accountants:

1. Reliance on third party sources of information – When companies and individuals are suspected of fraud, it is dangerous to rely on their records or representations during the investigation. Of course, we want to ask them questions and look at their documentation. But we want to be very careful about what we believe. Ultimately, the most reliable sources of information are third party sources, which are more likely to be authentic. For example, bank records, including bank statements, check copies, and deposit tickets are usually very reliable, as it’s unlikely (at least in the United States) that a fraudster manipulated them in some way. A check copy will tell me exactly where the money went, no matter what the accounting records say. Look for reliable third party sources of information on which to base your investigation.
2. The key is in an accurate and effective tracing of funds – The flow of funds is the key to a fraud, but technology is making this more difficult. Money moves quickly across the globe, and fraudsters intentionally confuse things by using multiple accounts and many movements of money to disguise what is happening. I am using cutting-edge technology that can plow through hundreds of thousands of transactions much quicker and more accurately than forensic accountants are able to do using only traditional investigative techniques. This has increased the speed and effectiveness of my investigations, and is providing a distinct advantage in fraud investigations and litigation for my clients.

More information on the Sequence Forensic Accounting System can be found here, and you can see me demonstrate some of the results of this system in a webcast: December 15 Webcast: Follow the Money?Using Technology to Find Fraud or Defend Financial Investigations.

Full post as published by The FRAUDfiles Blog on December 15, 2010 (boomark / email).