Countering Fraud for Competitive Advantage: The Professional Approach to Reducing the Last Great Hidden Cost

7

Detecting Fraud and Investigating Professionally

7.1 INTRODUCTION

In this chapter we explore the detection and investigation of fraud. We start by illustrating the costs of fraud investigation, because it is expensive, and highlight further the importance of preventative measures discussed earlier. After doing this, we examine who investigates fraud. The chapter then moves on to consider the importance of proactive investigation and some of the strategies which can be used, as well as making reactive investigations more effective. The main elements of conducting fraud investigations are then explored, highlighting best practice from the literature. The chapter ends with a consideration of what psychology can offer the investigator in enhancing their skills, particularly in detecting deception.

7.2 THE COSTS OF INVESTIGATION

Estimating the costs of any type of criminal investigation is fraught with difficulty. For example, in the UK there has been much interest in the media directed at the cost of investigating alleged frauds by Members of Parliament relating to their expense claims. In one such example in March 2010, the British newspaper, The Guardian, ran a story stating that, since the outbreak of the scandal in May 2009, the costs of the 13 police officers investigating the fraud had amounted to over £500,000.1 This largely related to the salaries of the officers. However, one could argue that those officers would have been paid anyway and the real cost should be additional ...