International Fraud Handbook

CHAPTER 5Fraud Investigation^*

Conducting a fraud investigation in any jurisdiction can be a difficult task. Investigations tend to involve accusations of wrongdoing against employees within the organization and can be disruptive, costly, distracting, and time-consuming. Furthermore, by their very nature, fraudulent acts are purposefully concealed, leaving the fraud examiner at a particularly difficult starting point.

METHODOLOGY

Fraud examination methodology requires that all fraud allegations be handled in a uniform, legal fashion and be resolved on a timely basis. Fraud investigations can lead to a variety of legal problems and other unexpected complications if they are not conducted with the utmost care and confidentiality. Consequently, fraud examiners should approach each fraud investigation with the proposition that the case will end in litigation. This assumption must be maintained and considered throughout the investigation. If fraud examiners assume litigation will follow each investigation, they are more likely to conform their conduct to the relevant rules of evidence and remain well within the applicable legal guidelines.

Further, unlike with other offenses, an inherent part of the methodology of committing fraud is to conceal its existence. For example, a bank robber’s modus operandi is the use of threats or force, while a bank embezzler’s operations involve not only stealing money but also covering up the theft. The element of concealment often increases the ...