Accounting Fraud Investigation: A Jigsaw Puzzle of Facts

Piecing together an accounting fraud investigation can be tricky. There’s a ton of financial data to sift through, making it difficult to prove if a fraudulent activity occurred or not.

Posted by Joe Gerard in on April 13th, 2011

Piecing together an accounting fraud investigation can be tricky. There’s a ton of financial data to sift through, making it difficult to prove if a fraudulent activity occurred or not. If there’s no one in your organization with the experience or skill set to handle an accounting fraud investigation, hire an outside professional in order to uphold the credibility of the investigation. The main focus of an accounting fraud investigation is to collect the pieces of the puzzle and put them together to create a clearer picture of what happened.

There are three main pieces in the accounting fraud puzzle: the pre-investigation, evidence collection and investigation interviews. These three activities help investigators get the information they need to complete the puzzle and report on the investigation.


You need to know what you’re looking for. Set objectives at the outset of the investigation to make sure you know what documents you will need to obtain, professionals you’ll need to involve and people you’ll need to interview. The easiest way to gain greater insight into each of these areas is to conduct a thorough pre-investigation. The pre-investigation will help you make sure you have the facts of the initial complaint straight.

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According to Eugene Ferraro’s book “Investigations in the Workplace,” interviewing the complainant during the preparation and planning phase allows investigators to determine the size and scope of the investigation and better judge the credibility of the allegations. This information will make it easier for you to find out what additional resources you’ll require and a list of who should be interviewed and why.

Evidence Collection

You can’t afford to risk having someone destroy evidence. I was reading a blog post from a well-known forensic accountant, Tracy Coenen, and it discussed how to get the data you need and what to do once you’ve got it. In the blog post “What do you do with mountains of data in a financial investigation?” Coenen notes that evidence collection can take awhile during an accounting fraud investigation, as most people won’t willingly hand over damaging information – they’ll put up a fight. Coenen writes:

“Counsel has to be careful to ask for the right data in the right format. Not properly identifying the information we are seeking can lead to denials that the information exists.  One of the goals in discovery is to be specific enough that we get targeted data, but general enough that we still get other important data we didn’t know existed. The format of the data is important as well. Even with technological advances, much discovery is produced in paper format. If possible, however, we should seek to get financial data in a digital format that we can use.”

Investigation Interviews

Investigation interviews take place after you’ve collected information and evidence pertaining to the investigation. Begin by interviewing the complainant, followed by the subject of the investigation and any witnesses or other people that might have useful information. A list of witnesses can usually be made during the pre-investigation and the evidence collection phase. Make sure you tailor each interview to the person and their role in the investigation. Ease into each investigation with job related questions and work your way up to the major incident being investigated. Some questions will be obvious and can be planned out ahead of time, but allow room for flexibility to ask questions based on the information presented by the interviewee.

It’s likely that the complainant has already surrendered any evidence they have, but take this opportunity to ask the witnesses if they have anymore “puzzle pieces” that could be used in the investigation. If they do, make sure you take the proper steps to obtain them. For more detailed information on how to structure and determine credibility during investigation interviews, download our free guide, “Investigation Interviews: A Best Practices Guide”. The information in the guide can be applied to accounting fraud investigation interviews.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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