Assembling an Investigative Team

Once the decision is made to go forward with a full fraud investigation, an team of qualified professionals must be assembled. Some may come from within company, while others might more appropriately be outside consultants and investigators.

The most important member of the team, next to the lead attorney, will be the fraud examiner or forensic accountant. This should be someone with experience investigating and analyzing fraud. Avoid people who are new to the field of fraud investigation, as you don’t really want them learning the ropes on your case. You’re better off looking for someone who has done literally hundreds of investigations.

The investigator will be in charge of the investigation and should be the “point person” for all of the other professionals. This person should lead the project and make sure that all necessary items are fully investigated.

Larger companies have in-house investigators who are well-versed in the process of fraud investigation. Smaller companies will likely have to hire an outside consultant for their investigation. This shouldn’t be considered a bad thing. In fact, one of the benefits of an outside consultant is the independence that she or he can bring to the project. There are no preconceived notions about the company or the employees.

Auditors can play a supportive role in an investigation, but usually do not have the expertise to do the actual investigative work. Their help is critical when it comes to providing information about the company’s procedures and controls. Their familiarity with the company’s accounting function and financial statements can be useful when performing the investigation.

The final authority on the investigation should be legal counsel. Although the attorneys won’t usually be actively investigating, they’re responsible for formulating a legal strategy and deciding what action the company might take against the parties responsible for fraud. Because of this, the attorney will dictate the direction of the investigation, and the fraud investigator should report to the attorney and work closely with the attorney to achieve the investigative objectives.

A management representative and a member of the board of directors should be involved in the investigation as well. While they won’t actively investigate, they can provide critical information about the company and the operations. They also must be involved because they need to know about potential fraud, and they ought to have some “say” in the investigation.

The final potential members of the investigative team are outside consultants. They can be valuable when there is a particular expertise needed. One typical example is a computer forensics expert. Oftentimes, companies discipline employees and secure their company-owned computers. A computer consultant who works with digital evidence for a living is usually the best person to examine those computers and retrieve any evidence.

Tracy L. Coenen, CPA, MBA, CFE performs performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.