Here’s a simple way to break down the idea of a corporate fraud investigation. If you’ve got a compliance department, this is way too basic for you. But if you’re at a smaller company that is new to the concept of fraud (either because you recently had a fraud or because you have decided that fraud prevention and detection are important)…. then this might help you see the basic things that you’ll need to put in place.

A corporate investigative policy is necessary because it is important to have guidelines in place for the start of an investigation. What should management do when fraud is suspected? How are fraud allegations to be evaluated? When and why does the company initiate a full-blown investigation?

Most managers and executive haven’t had to deal with allegations of serious fraud. They need some guidance so that evidence isn’t corrupted and so that the allegations are handled fairly. A well-designed policy will help avoid claims of selective treatment. It also brings uniformity to the process so that similar offenses are treated similarly.

The investigative team will carry out the full fraud investigation. Depending on the seriousness of the allegations and the level of examination required, the team could be as few as one or two people, or as many as dozens of people. The team might include: attorney, fraud examiner or forensic accountant, auditor, private investigator, computer consultant, and a management representative. For smaller companies, your fraud investigation team will likely be made up of outside consultants, rather than dedicated employees.

Proper management of the fraud investigation is the third key piece to being effective. There are ways to go about a fraud investigation, so you need someone who knows how to manage these aspects. Included in the responsibility for management of the investigation are: document management procedures and supervision of staff and consultants.  The key is being able to quickly locate critical documents, and ensuring that all necessary issues are examined.

The focus of the fraud investigation should be to determine:

• Whether or not a fraud occurred
• Who was responsible for it
• How much was lost to the fraud. E

Evidence of the findings must be gathered and presented to those who need to know, such as the lead attorney, upper management, and the board of directors.