Five Ways Forensic Accountants Can Make Workplace Fraud Settlements Easier

Alex Helfand, ENCE, Computer Forensic Specialist

It’s in the local newspapers every week – an employee finally gets caught committing white collar fraud at his or her workplace. Worse yet, the employee is found out years after the fraud began, and typically is a trusted team member with no prior criminal record to give an inkling that this could be possible. Some losses are incalculable, such as trust; others are hard to determine – the perpetrator often has had direct and occasionally sole access to many company functions and records, using several advanced technological methods to hide the crime from immediate detection.

If your organization finds itself in this position, how will it handle the situation? Going to court could wipe out any monetary award if the fraud isn’t substantial enough, or if sufficient evidence couldn’t be found to account for all of it. When the situation becomes a matter of public record, your organization may not want that type of “free advertising.” Ideally there would be a relatively speedy and simple settlement that recoups as much of the loss as possible – the object in account litigation is to reach settlement without going to trial. How is this possible?

The CEO of your organization may not know all aspects of the programs used in your operations and the technology behind them, but it is helpful to know someone who does. A forensic accountant knows where to begin, and how to make the fraud settlement process as straightforward as possible. Often, the forensic accountant studies to become a Certified Fraud Examiner (CFE), enabling a wider range of skills to assist in litigation and settlements. These professional fraud investigators have several tools and techniques at their disposal to help prove your workplace fraud case, enabling the establishment of a legitimate case and, hopefully, the best settlement possible. Following are some of these ways which help establish a case in the first place, all ultimately leading to a better chance of a clear and complete settlement:

Five Components of the Forensic Accountant’s Role

  1. Coming up with the case material. The forensic accountant or CFE will know which records and materials could be useful in assessing the entire financial situation – there could be more than one way that fraud was being perpetrated.
  2. Planning the case strategy. As mentioned earlier, the cost of presenting a case may outweigh the benefit of the settlement. As a clear idea of all of the losses involved emerges before the case is in motion, including loss of potential future income, it can be established whether the firm should proceed with the case and how.
  3. Working with employees, management and others. Due to their experience handling workplace fraud, forensic accountants will know the questions to ask, and the signs to look for. As workplace fraud is typically conducted by a lone employee, understanding the human nature and thought processes of a fraudster can help uncover additional clues.
  4. Conducting an internal investigation. With their accounting background, as well as specific studies in data management and electronic discovery, forensic accountants work together to provide the litigators with information necessary to win a successful settlement.
  5. Providing a complete written report. At some point in the fraud case, a written report must be provided by the forensic accountant, and the strength of the results based on the work performed has the power to intimate a very strong case. Discouraged by the comprehensive conclusions in the report, the fraudster may be much more likely to prefer to settle the case to discourage negative publicity, have funds to pay what would likely be proven if the case went to trial, or just have the sheer realization and acceptance that they committed fraud and were caught.

An Ounce of Prevention…

Of course, most organizations would prefer to not have fraud appear in their workplace, or anywhere else for that matter. Remember, the odds of maintaining a fraud-free workplace are more in your favor if you’re working with a forensic accountant to help prevent fraud in the first place.

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