2. The Fraud Investigation and Engagement Processes07
The Fraud Investigation and Engagement Processes
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

3. The Fraud Investigation Process
The fraud investigation process involves systematically gathering and reviewing evidence for the purpose of documenting the presence or absence of fraud.

4. The Fraud Investigation Process
The engagement process: the series of steps that begins with the investigator’s first contact with the case and concludes with a complete agreement regarding the fraud investigation.
The evidence collection process: the various steps in which evidence in support of the objectives and scope of the investigation is collected.
The Fraud Theory
Approach to
Evidence Collection

5. Four Types of Evidence

6. The Fraud Engagement Process
The fraud engagement process begins with the investigator’s first contact with the case and ends with a complete agreement regarding the services the fraud investigator will provide.

7. The Incident Report
Includes the initial information used to justify the investigation
The initial information should be included in a unified case file
The incident report can serve as probable cause for law enforcement
The incident report can provide proof that the suspect is not being singled out because of illegal discrimination or in violation of collective bargaining rights

8. Consider Legal Issues Consider rights of workers or other suspects
Consider the possibility of conducting the investigation under attorney-client privilege
Evaluate the evidence and consider whether there is sufficient legal justification to fire a worker or place a worker on administrative leave
Consider the rights of investigating employers
Consider the extent to which a government entity might be involved in the investigation
Consider reporting obligations

9. Evaluate Loss Mitigation and Recovery Considerations
Immediate Loss mitigation options: (1) immediately fire the employee, (2) change the employee’s job responsibilities, (3) place the employee on administrative leave (with or without pay), or (4) permit the employee to continue in her current position, possibly continuing the fraud, thus giving the investigator the possibility of catching her in the act.
Insurance recovery
Recovery through litigation
The objectives, scope, and costs of the investigation

10. Possible Objectives for an Investigation
Stop the fraud from continuing.
Identify the loss for insurance purposes.
Identify the loss for tax purposes.
Make an example of a fraudster.
Minimize any embarrassing disclosures in the press.
Discover weaknesses in the internal control system.