Fraud schemes are becoming more complicated and sophisticated, so it’s vital to build an effective forensic accounting team to investigate suspicious activity. This article explains why team members must be free of conflicts, why at least one member should be familiar with issues relating to potential litigation, and why members must have practical — not just theoretical — experience with the matter at hand. 

Use a multidisciplinary approach

All forensic accounting team members should be free of conflicts and bring qualifications that are relevant to the specific investigation. For instance, if management suspects an employee of accepting kickbacks, the team should include accountants who have experience examining such schemes — as opposed to experts who merely have a theoretical understanding of the matter. Similarly, if the scheme is particular to a certain industry, such as inventory theft in a pharmaceuticals manufacturing business, the team should include someone with experience in that sector. 

At least one team member should be familiar with issues related to potential litigation, such as discovery and expert testimony. Most investigations today also require electronic evidence expertise, including knowledge of data mining, extraction and preservation. 

Additionally, because most investigations conclude with a final written report, the team should include someone with report-writing skills. In many cases, intermediate reports also are drafted throughout the investigation process.

Screen squad members

An auditing background usually isn’t sufficient to prepare someone to conduct fraud investigations. Although it provides a strong foundation, certified public accountants (CPAs) investigating fraud incidents also need specific forensic skills. 

The nonattest services standards of the American Institute of Certified Public Accountants (AICPA) explain that providing a client with specific forensic services may impair a CPA’s independence for audit and other attest service purposes. The AICPA standards don’t specifically prohibit forensic services from an accounting professional who performs attest services (including audits) for a client. 

However, enlisting this expert for a fraud team could call into question his or her adherence to professional standards, which could, in turn, undermine the expert’s credibility. Ideally, team members hold no such risk and are able, when necessary, to challenge your and your clients’ perspectives.

Some CPAs pursue specialized undergraduate or master’s degrees in forensic accounting. Others obtain the certified fraud examiner (CFE) designation awarded by the Association of Certified Fraud Examiners (ACFE), the world’s largest professional antifraud training and education organization. The ACFE requires education and work experience, plus successful completion of a comprehensive exam that covers 1) financial transactions and fraud schemes, 2) law, 3) investigation, and 4) fraud prevention and deterrence. To maintain the CFE credential, an expert also must abide by the ACFE’s bylaws and code of professional ethics.

Assemble your team

Forethought and attention to detail are critical when putting together a team of experts to investigate potential fraud incidents. Your CPA can be a helpful resource during this stressful time. This trusted advisor — if not trained in forensic accounting — can refer you to other specialists to help ensure you avoid data preservation and legal minefields. 

Contact our team today if you have questions about fraud schemes.