What to Do if You Suspect Fraud in Your Organization

Alex Helfand, ENCE, Computer Forensic Specialist

As an executive or business owner, do you know what to do if you suspect that fraud is occurring in your organization?  Perhaps you have spotted some unusual employee behavior or lifestyle habits that don’t seem quite right, or you have found irregularities on reconciliations and the explanations that your employees provide are vague and confusing.

By bringing in forensic experts and consulting with legal counsel, you can stop fraud in its tracks.  And, by making sure your employees have opportunities to provide tips and anonymously report suspicions, you can decrease the risk of fraud.

Bring in the Experts
Forensic accountants are focused on uncovering irregularities and can zero in on suspicious transactions and faulty operations.   These specialists employ various approaches to making a determination of occupational fraud, calculating the amount of losses suffered, and discovering whether there were any accomplices. Some possible actions by the forensic accountant may be to:

  • Bring in a Certified Computer Forensics Examiner, such one with an EnCase® certification, to take an image of a hard drive.  These images can then be used to recover documents or emails – even if they have been deleted.
  • Analyze financial records and data, trace illicit funds, and locate hidden assets.

Take Legal Action
After reviewing the support and evidence revealed by this research, litigation may be the best option.  Consult with your attorney or ask your accountant, insurance agent, or other service providers for a referral to a knowledgeable legal professional.  If needed, the forensic accountant you have hired may be able to provide litigation support and can serve as an expert witness.  In light of this potential need, you should always ensure the professional you hire can provide expert witness testimony, should your case go to trial.

Offer Reporting Mechanisms
Frequently, the detection of occupational fraud is the result of a report from just a single employee.  One of the most important things your company can do to protect against fraud is to encourage employees to report any suspicions they have through a tip hotline.  Implement a corporate fraud policy that outlines a clear plan of action for employees to report their suspicions and promptly follow through on any tips provided and make it clear that fraud will not be tolerated.

When you suspect fraud, contact your trusted advisors and act quickly to prevent additional losses.  To lower the risk of fraud, always be on the lookout for suspicious employee behavior, weak internal controls, and tips from employees.

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