Responding to an allegation of bribery, corruption or fraud can be a challenging task for boards of directors and senior management. Stakeholders will want to know:
This is where a specialist forensic investigator can step in. A reputable consulting firm, with a specialist forensic accounting practice can provide expert assistance to not only answer the questions of what happened and who did it, but also to look beyond the immediate facts to establish where control failures have occurred and how those controls can be strengthened.
Those charged with governance of an organisation can take comfort, knowing that they have engaged an independent and properly qualified investigator to provide expert advice.
When an organisation suffers an integrity breach, they often lack the necessary skills, resources or independence, to conduct an effective investigation. Requesting assistance from a law enforcement agency might seem like the logical first step, but law enforcement will not typically take on a fraud investigation until the groundwork has been done. Evidence needs to be collected in a timely and lawful way and then analysed to establish a prima facie case. While law enforcement agencies certainly provide an invaluable service, their role in a corporate investigation is not always well understood.
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| Works on behalf of the Crown, for the public good. | Works on behalf of an organisation that has suffered a fraud. |
| Investigates crimes so that those with criminal responsibility can be prosecuted. | Investigates so that an organisation can refer matters to law enforcement. |
| Establishes loss for the purpose of proving an element of a criminal offence. | Considers management failings. Considers control failures and makes recommendations to strengthen controls. Quantifies total loss including investigation costs, loss of profit etc. |
| Might seek a reparation order for direct loss. | Will assist in preparing strategies for recovering total loss |
In workplace frauds there is nearly always an employment situation that needs to be resolved alongside any possible criminal offending.
Engaging an independent investigator who is experienced in employment investigations means that an organisation can investigate potential misconduct and resolve any disciplinary matters before any criminal proceedings might be initiated.
A key step that is often overlooked by organisations is that once criminal proceedings are reasonably contemplated, an employer’s ability to resolve a disciplinary matter can be curtailed. In some situations an employer can be forced to retain a suspended employee until criminal proceedings are resolved, which can take some time.
When it comes to investigations, forensic investigators play an important role in filling the gap between the requirements of an organisation that has suffered fraud, and the capacity and mandate of law enforcement.
Matt Preece
Matt Preece is an Associate Director in KPMG’s Forensic Team and is a subject matter expert in fraud risk. Prior to his time in professional services, he spent 21 years with the NZ Police and Serious Fraud Office.
