The first steps to start a forensic investigation

Fuller Landau team • May 13, 2019

You think you notice some missing funds. Your books just don’t seem to add up. The employee in charge of your finances has purchased a number of big-ticket items that they shouldn’t be able to afford. There are many reasons why you might require a forensic accountant, but regardless of what you’ve found, who you suspect, or what’s at risk, the first step to starting a forensic investigation is the same:

Remain Calm

Fraud can be extremely frustrating and often feels very personal, particularly when the suspected perpetrators are trusted employees. However, the most important first step is to keep a level head. Don’t publicly announce your suspicions and maintain strict confidentiality. Contacting a forensic accountant and your legal counsel are good first steps.

Stop the Bleeding

Letting alleged fraudsters know that you suspect their actions may only provide an opportunity to destroy evidence before it is uncovered and will make your investigation more difficult. However, you need to stop the bleeding. For example, freezing signing authority may be necessary if the allegation is misappropriation of funds. Securing inventory in the warehouse, if applicable, is another example.

Be Careful Who You Trust

A fraud conspiracy can span across departments and seniority levels. A forensic accountant will assist you in developing a hypothesis as to what has happened. For certain, maintain confidentiality to the highest degree. The forensic accountant will conduct interviews.

How Will Your Forensic Accountant Help?

An experienced forensic accountant will work to build a hypothesis as to if and how funds or other assets have been misappropriated from the business.

A forensic accountant will also assist in developing a plan to secure, extract and test financial and other data from your accounting and other systems.

In conjunction with your legal counsel, your forensic accountant will look at potential sources of recovery. Does the business have insurance coverage? Is freezing/securing the assets of the accused required? In addition, a forensic accountant may prepare a report that could support your insurance claim or civil action.

Does Your Company Have a Fraud Response Plan?

Some companies may already have a formal fraud response plan in place. Such a plan will have detailed steps on how to address suspicious activity, who to assemble to ensure a comprehensive, unbiased investigation committee, and the steps to ensure that the collection, custody and preservation of evidence is done properly. A forensic accountant will be able to lead this process.

Call Fuller Landau

Our forensic accounting experts can advise you on how to navigate the forensic investigation process. We will work together with your fraud investigation team to understand what happened, properly gather and protect evidence, and prepare an expert report.

In the event you encounter suspicious activity, call us today.


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