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What You Need To Know About Fraud Investigation Process And Procedures

What You Need To Know About Fraud Investigation Process And Procedures


There are many tools forensic accountants use while conducting fraud investigations. Some of these tools are similar to procedures used by law enforcement, some are a result of our backgrounds as experienced CPAs and auditors, and others are derived from our experience as licensed private investigators. The structure and planning of a fraud investigation is important to yielding a useful and detailed outcome. Below are a few of the procedures utilized by forensic accountants to yield meaningful results from the fraud investigation process.

Searches of Public Records:

Past research has shown that anyone can commit fraud. Fraud perpetrators typically cannot be distinguished from other people by demographic or psychological characteristics. Gathering information from public records on the alleged offenders of fraud enables the financial fraud investigator to gain insight into the individual’s motives and capabilities, such as:

  • A person who has significant debt.
  • Perceived opportunity.
  • State of mental health – somehow rationalizing the fraud as ‘acceptable.’
  • Alleged pressure.
  • A person’s work background can also be an important consideration during the investigation.

If a person has a financial background and is fiscally savvy, it enables the investigator to view the alleged wrongdoing in a different light because the fraud scheme can be more sophisticated than one perpetrated by a non-financial person.

Analysis of Financial Documents:

Forensic accountants are provided with a range of documents that detail what the alleged perpetrator used to embezzle funds or misappropriate assets, such as:

  • Bank records
  • Canceled checks
  • Credit card statements
  • General ledgers
  • Original source documents
  • Other financial or accounting information

Depending on the scope of the investigation, the examination of documents may extend from the company’s records to the alleged perpetrator’s personal financial records. Each case requires different procedures depending on the type of case. Third-party documentation can also be utilized to facilitate the investigative process.

Development of a Detailed Report:

The cornerstone of most fraud investigations is the forensic accountant’s report, which summarizes all aspects of the investigation, including:

  • Methods used to conduct the investigation.
  • Documents analyzed.
  • The investigator’s findings.
  • Background information.
  • Analysis and exhibits.

The report should be professionally written in sufficient detail to allow the reader to follow the trail of events and reasoning behind the findings. Our reports are used by law enforcement to pursue criminal charges, by courts of law for civil cases against alleged perpetrators, or by business owners for their own edification as to how the fraud was perpetrated and how to prevent it from occurring in the future.

When dealing with fraud and embezzlement, it is important to have an accredited forensic accountant better analyze the activity. Veriti Consulting LLC has an exceptionally experienced and credentialed team of fraud investigators. We are licensed as CPAs and have large accounting firm experience. In addition, we are licensed private investigators and hold multiple credentials in the forensic accounting discipline, including Certified Fraud Examiner, Certified in Financial Forensics, and Certified Forensic Accountant.

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If you or your client experiences a fraud event, contact one of our managing directors at (877) 520-1280 to discuss how we can be of assistance.

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