Fraud Examination, 3E Chapter 8: Investigating Concealment COPYRIGHT © 2009 South-Western, a part of Cengage Learning

Learning Objectives Describe concealment investigation methods and how they relate to fraud. Understand the value of documents and electronic records in a fraud investigation. List the different methods of obtaining documentary evidence. Understand how to perform discovery sampling to obtain documentary evidence. Explain how to obtain hard-to-get documentary evidence. 2

Aspects of Documentary Evidence Investigators must understand the following aspects of documentary evidence: Chain of custody of documents Marking of evidence Organization of documentary evidence Coordination of evidence Rules concerning original versus copies of documents 3

Aspects of Documentary Evidence Chain of Custody of Documents a record must be kept of when a document is received and what has happened to it since its receipt 4

Aspects of Documentary Evidence Marking the Evidence A transparent envelope should be used to store the evidence, with the date received and the initials of the examiner written on the outside A copy of the document should be made, and the original document should be stored in the envelope in a secure place 5

Aspects of Documentary Evidence Organization of the Evidence Evidence database should have the following: Dates of documents Sources of documents The dates on which documents were obtained Brief descriptions of document contents Subjects of documents Identifying or Bates number 6

Aspects of Documentary Evidence Original Documents versus Photocopies Originals are preferable to photocopies In certain jurisdictions, only four situations permit photocopies 7

Aspects of Documentary Evidence Obtaining Documentary Evidence: Audits Auditors conduct seven types of tests (1)Tests of mechanical accuracy (recalculations) (2)Analytical tests (tests of reasonableness) (3)Documentation (4)Confirmations (5)Observations (6)Physical examinations (7)Inquiries 8

Aspects of Documentary Evidence Obtaining Documentary Evidence: Discovery Sampling **Use full-population sampling to avoid when frauds may exist in only a few records 9 Sample Results Inferences about the Population

Aspects of Documentary Evidence Obtaining Documentary Evidence: Hard-to- Get Documentary Evidence Three ways to obtain documentary evidence: 1.Subpoena 2.Search warrant 3.Voluntary consent 10