Approaching Fraud Investigation In A Novel Way

Fraud is investigated by numerous different bodies including police forces, fraud regulatory authorities, internal auditors and forensic accountants. There are a multitude of different legislative powers that they can use including but not limited to the Police and Criminal Evidence Act, the Regulation of Investigatory Powers Act, the Employment Acts, the Insolvency Act and the Companies Act. These acts all contain powerful provisions for investigating fraud, but all involve utilising costly professionals or the disruption of the victim company by the regulators.

If the police are informed of a loss due to fraud they may sometimes be heavy handed in their investigation. Sometimes they will seize a victim company's accounting books and records and take them away for analysis. This can often take a long time. This can have a very disruptive effect on a business that might already be suffering due to a fraud, and if the process takes so long it might allow the culprits to escape.

If a business suffering fraud asks for help from its advisors, this can assist without disturbing normal activities. However, employing lawyers to manage civil asset recovery action, and forensic accountants to trace any lost assets, can be an extremely costly exercise. Often this only happend when large amounts have been defrauded.

So what can be done, to investigate a fraud and recover assets, when only modest sums of money have been stolen? It would be possible to utilise a company's own internal resources in order to keep costs down and to ensure that the criminal regulators are kept at bay. However, very few businesses will have internal expertise that possesses the experience and qualifications necessary to undertake a fraud investigation. More harm can be done by employing inexperienced resources to detect and recover losses from fraud. To give an example, if an employee is not treated in accordance with Employment Acts legislation it is possible that a potential fraudster could end up suing the company for constructive dismissal!

One answer could be using a combination of an outside expert and a company's own staff. By utilising external fraud expertise it may be possible to manage the efficient use of internal resources to conuct a fraud investigation. This means that an organisation can carry out fraud investigation and asset tracing work under the competent guidance of a fraud expert without employing expensive teams of lawyers and accountants to do the work. The expert will keep the police or other criminal regulatory authorities informed, and may even submit an investigation report to them for a subsequent criminal prosecution. The victim will need to employ appropriate legal expertise, but only when required and only those that are capable for the task of recovering assets. Unless there is a need to show investors or the outside world that a substantial "branded" investigation is being undertaken, a safe, quick and economical option for recovering assets must be to efficiently match internal resources with external expertise.