ADVANCED FRAUD INVESTIGATION TECHNIQUES

Introduction to Fraud Investigations

Over forty types of fraud schemes, involving fraudulent financial statements, misappropriation of assets, bribery, money laundering, bankruptcy fraud, tax fraud and other types of fraud require the assistance of the forensic accountant to investigate, sort, and verify.

Forensic accountants are often called upon to initiate a fraud investigation for the primary purpose of determining whether a fraud has occurred. Other reasons for initiating a fraud investigation include the following: a tip or concern received (from an employee, a vendor, a customer, or other source), an accidental discovery, fraud uncovered as a result of an audit, or a concern from the business as to the adequacy of their internal controls system.

Fraud Investigation

A fraud investigation is the systematic examination to obtain the truth as to:

1. Whether a fraud has occurred

2. Who is involved

3. How it was perpetrated

 Fraud Investigation Versus Accounting Audit

While a fraud investigation requires the use of both accounting and investigatory skills, it is vastly different from an accounting audit. Joseph T. Wells, the founder of the Association of Certified Fraud Examiner (ACFE), has said, “A good fraud examiner is part accountant, part psychologist, and part lawyer,” There are four key areas in which a fraud investigation differs from a financial statement audit target, purpose, techniques, employed, and required standards.

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