Fraud prevention programs such as an internal control examination, fraud risk assessment or employee hotline, are all critical components in driving down the risk of fraud occurring. But what happens when the fraud has already occurred?
The truth is, unfortunately, that 90 percent of our forensic accounting clients have already suffered a fraud loss. So, the majority of our time is spent detecting, examining, investigating and litigating fraud matters.
What to do if you suspect fraud
Dealing with fraud is a unique situation for most businesses and individuals. Here are a few things to keep in mind if you suspect fraud:
- Act timely. Once a fraud is detected, the clock begins to run. The statute of limitations for fraud can vary by location, but most states agree that the time period begins when the fraud is, or should have been, detected. This also applies to insurance claims. If you plan on filing an employee dishonesty claim with your insurance provider, put them on notice immediately so you can take the proper steps to a successful claim.
- Gather information. Gather as much supporting proof as possible. Do not jump to conclusions based on a red flag and a hunch. Utilize third-party documentation, such as bank records and vendor invoices. The evidence you gather should not be produced or made known to the person of interest. This will only provide them with time—time to obtain an attorney, create excuses, or even blame others.
- Do not make accusations.Premature accusations or discipline can lead to unwanted or unnecessary liability. This can include wrongful termination, slander, defamation, or libel claims. Paid administrative leave can be an option until the situation is corrected. Use caution because it can inadvertently tip the fraudster that they are being investigated, giving them a chance to obtain an attorney, which can make obtaining future information from them very difficult.
Uncover the truth and find where the money went.
The costs associated with forensic accountants
Fraud comes at a great cost to most organizations, regardless of size, industry or service. In the face of financial disaster, the last thing they want to worry about is a large bill for forensic accounting. However, the use of a forensic accountant is critical in helping organizations comb through the information and gain an understanding of what happened, while keeping business interruption to a minimum.
Certified forensic accountants are highly qualified and certified and have years of experience across a multitude of fraud cases. The more experience they have, the higher their consulting rate. Further, they have to produce impeccable work the can be admitted into court proceedings. This means the facts of the case must be well-represented so that clients, attorneys and/or businesses can make accurate decisions moving forward.
Ways to keep forensic accounting costs down
Here are three common ways forensic accountants assist in matters while keeping costs low and affordable:
- Organize and provide data Data is king. It tells us everything. When someone can provide clean, organized data, it makes the decision making process much smoother. In some cases, clients don’t need a forensic accountant in order to start unpacking what the data means. They just need it in such a way they can analyze it themselves.
An example would be utilizing forensic software to process and provide clients with bank transaction data. This allows clients to take advantage of their technology while using a minimal quantity of a forensic accountant’s time.
- Review findings
Forensic accountants don’t need to comb through all the information. Rather, if you compile your findings, a forensic accountant can review your organized findings and supporting documentation. From there, they can consult on what you may need or other items to consider. Again, a small quantity of time may provide a lot of value.
- Data analytics
Organizations are often dealing with large data sets and ultimately lost as to where to find the information they need. Forensic accountants can help you review large data sets to monitor trends, improve internal controls, revise policies, boost productivity and increase efficiency.
When it comes to fraud specifically, forensic accountants can examine the data and apply common fraud detection methods to the data to identify questionable activity. This information can be provided back to you for further review.
- Take preventative measures.
Preventative programs are always the best method in the fight against fraud. While fraud may have already occurred, preparing for future attempts can keep your costs down long term. Consider including money in your organizational budget for regular forensic audits or internal control examinations. Knowing where you’re at on a regular basis will help you see potential disasters coming down the road.
Forensic accounting is critical, but it doesn’t have to be costly
The job of forensic accountants is to consult, organize information, analyze data and provide you with comprehensive reports that can assist in legal matters. You may not have to use experts in all matters, and by requesting only specific tasks be performed, you can obtain the necessary information for your case without breaking the bank.
Uncover the truth and find where the money went.