Managing Internal Investigations

LIVE FROM THE 2015 ACFE ASIA-PACIFIC FRAUD CONFERENCE

By Emily Primeaux
Assistant Editor, Fraud Magazine

“If you go out into the mall to buy clothes, shoes or that smartphone you’ve got in your pocket, how much do you scrutinize the quality of that product?” asked Jonathan Davison, Chief Executive Officer of Forensic Interview Solutions at the 2015 ACFE Asia-Pacific Fraud Conference. “What I want is for you to look at your investigation as a product. Can it be scrutinized? Are there gaps in it? As an information-gatherer, where can your product go? Thinking about where it goes is the quality of it.”

Davison posed these questions to attendees at the beginning of his Pre-Conference session, Managing Internal Investigations. In a three-part session, Davison discussed the key elements of an internal investigation, from the beginning objectives, to evidence collection and analysis, and then to the finalizing the investigation by writing reports, presenting the case and overcoming reluctance to prosecute.

Beginning an Investigation

Davison first emphasized that the ACFE Report to the Nations on Occupational Fraud and Abuse tells fraud examiners the key data they need to know about the schemes they might be investigating. One example he gave was the perpetrator’s level of authority. “Depending on how you go up the structure has an impact on the level of fraud that’s being committed, the people involved in it and the amount that’s being taken,” said Davison.

Davison also explored the motivations behind why fraudsters commit their crimes. He cited the Hollinger and Clark Study of 12,000 employees in the workforce. The researchers concluded that the most common reason employees committed fraud had little to do with opportunity but more to do with motivation — the more dissatisfied the employees, the more likely they were to engage in criminal behavior.

Using these tools and an investigative mindset, Davison dove into the initiation of the internal investigation. He emphasized the ABCs — Assume nothing, Believe nothing, Check everything. Davidson also covered the key steps to conducting a fraud examination:

• Data analysis. Before analyzing documents or conducting interviews, examiners should perform data mining and other electronic analysis of relevant information.
• Document examination. Examiners should review documents before interviewing anyone to gain an understanding of the potential evidentiary value of the case, as well as to protect the security of documents.
• Interviews. Examiners should interview witnesses in a logical fashion.
• Report writing. The final step in most internal investigations is the preparation of a written report that summarizes the steps taken and conclusions reached. 

According to Davison, time is also of the essence when considering the quality of your investigative results. “Do you have sufficient time, as investigators, to conduct your investigation? The danger of that is it affects your investigation and the quality of it.”

Evidence Collection and Analysis

Davison explained that documents make up so much of the evidence in fraud cases that it’s important to understand the appropriate way of handling them. Two of the more important aspects of handling documents are chain of custody and marking evidence. 

He also discussed the importance of properly organizing evidence, since fraud cases can create large amounts of paper. Documents can be segregated by witness or transaction, key document files should be updated continuously, and databases can be established to handle large volumes of information.

Finalizing the Investigation

Writing a comprehensive, understandable and effective report is critical. “The best things in life are simple, straightforward and easy,” said Davison. He explained that the fraud examiner will need to address the classic questions of who, what, where, when, why and how. 

And finally, Davison expressed the importance of self-evaluation. “How often do you evaluate your investigations?” he asked. “Do you as a team of investigators sit down after the investigation has been finalized and critique your investigation? We can always improve and look at how we do that with an investigative mindset.”

Golf & Investigation: Learning the Foundation

INTERVIEW WITH JONATHAN DAVISON 

Managing Director, Forensic Interview Solutions (FIS) Limited in New Zealand and upcoming instructor for the upcoming courses Conducting Internal Investigations in Auckland and Professional Interviewing Skills in Sydney

Jonathan Davison has more than 12 years of investigation and interview experience as a detective with the Greater Manchester Police. He specializes in the forensic application of the “science of interviewing” in the workplace to improve investigative decision-making, efficacy and quality.

Neither of these ACFE courses has been taught in the region before. Why do you think these topics are valuable for anti-fraud professionals in Australia and New Zealand?

These courses cover the basic skills for those involved in a fraud investigation. It’s extremely valuable for people all over the world, no matter where you are located, to have these basic skills. These are the core foundations on how to conduct an investigation and how to conduct an interview. In my experience, many professionals aren’t being trained to the extent they fully need to be for conducting an investigation from beginning to end. It is one thing to think you can investigate a fraud, but it is quite another to actually do it. It is like learning how to play golf. You can go out to the driving range and practice, but you don’t really have the foundational skills on how to do it the best way. These courses teach those skills.

Who would you recommend take these courses, and what do you hope they walk away with?

These courses are designed for a broad range of positions. This could be anyone from human resources to investigation; anyone that is involved in or could be involved in a fraud investigation. I am hoping for attendees to walk away motivated and with really tangible, practical skills they can begin using immediately.

What current trends do you think fraud examiners face that are distinct to their regions?

I think we are all seeing that fraud is not just a simple case anymore. It is global and it crosses different cultures and countries. Add to that, the technology is getting more complicated. Anyone that has access to a computer and a keyboard can commit fraud. We have to remember that it may not always be about obtaining a confession from people. A trend we are seeing is that we are not getting admissions right away or at all. It is about the whole investigation coming together and the search for truth. You don’t always need the magical words of, “I did it” if you have the evidence and a good product. I like to tell people that you are creating a product to sell to the jury, and you want to make a strong, quality product. 

Read more about Conducting Internal Investigations and Professional Interviewing Skills.

The First 24: What Happens During the Initial Stages of an Internal Investigation?

AUTHOR'S POST

Mandy Moody

ACFE Social Media Specialist

You receive the tip. You identify the suspect. You assemble a team. It’s now time to act. Those first steps can be crucial when beginning an internal investigation and assessing an allegation of fraud. Fortunately, the first 24 hours can go off without a hitch with the help of a little planning and preparation.

Leah Lane, CFE, Global Investigations Manager at Texas Instruments, Inc. will cover these scenarios in her four-hour Pre-Conference session, Conducting Internal Investigations: Planning and Logistics at the ACFE Annual Fraud Conference this June. The Pre- and Post-Conference sessions, a four-hour session and two-day seminar, respectively, are ideal for those looking to spend more time digging deeper into specific issues they face as fraud fighters.

Of course, Lane isn’t the only expert offering insight in these sessions. Check out the lineup below:

Pre-Conference Sessions, June 17, 2012

• Conducting Internal Investigations:Planning and Logistics - goes into detail about the who, what, where, when and how of planning an internal investigation
• Creating an Effective Work Product for the Courtroom -practical advice on how to handle litigation and maximize effectiveness
• Planning and Conducting Vendor Audits -gives a solid foundation for vendor audits, identify which vendors to target and know what common fraud schemes to look for

Post-Conference Sessions, June 21-22, 2012

• Auditing/Investigating Fraud Seminar - delves into the must-have anti-fraud concepts for auditors and investigators, as well as tips and techniques
• Contract and Procurement Fraud - from the field knowledge of how to detect and deter devastating contract and procurement frauds
• Investigating on the Internet: Research Tools for Fraud Examiners - learn how to research foreign corporate records and optimize online searches

Read more about the speakers and sessions at the 23rd Annual ACFE Fraud Conference.