How to handle evidence in a fraud investigation at your business
Every business owner should establish strong policies, procedures and internal controls to prevent fraud. But don’t stop there. Also be prepared to act if indications arise that, despite your best efforts, wrongdoing has taken place at your company.
How you handle the evidence obtained could determine whether you’ll be able to prove the charges brought against the alleged perpetrator and win the case in court.
Protect the chain
Handling paper documents is relatively easy as long as you approach the task with care. Place any hard copies related to the possible fraud in a secure location. The fewer people who touch them, the better.
Don’t make notes on the relevant paper documents. Instead, write notations about when and where they were found, and how you preserved them, in a separate log. You can copy anything you need to continue operations and turn the originals over to your professional advisors or law enforcement for fingerprinting, handwriting analysis or other forensic testing.
Remember, a court case can be derailed if you don’t preserve the chain of evidence and can’t prove to a judge’s satisfaction that documents haven’t been tampered with.
Train IT staff
Digital evidence generally presents more challenges — especially if your IT staff isn’t trained to react to fraud incidents. Even if these employees are highly skilled at setting up and troubleshooting hardware and software, they’re unlikely to be fully aware of the legal ramifications of dealing with a computer or mobile device used to commit fraud.
To avoid the inadvertent destruction or alteration of evidence, arrange for specialized training that teaches IT employees to respond appropriately when fraud is suspected. They should be instructed to stop any routine data destruction immediately. If your system periodically deletes certain information, including emails, IT staff should suspend the process upon notification that something is amiss.
In many cases, it’s wise for businesses to engage a qualified computer forensics expert to assist in the investigation. These professionals can identify and restore:
Deleted and altered records,
Digital forgeries, and
Intentionally corrupted files.
They also can access many password-protected files and pinpoint unauthorized system access.
According to the Association of Certified Fraud Examiners’ “Occupational Fraud 2022: A Report to the Nations,” a typical scam goes on for 12 months before detection, and the median loss amounts to $112,000.
The message is clear: Fraud can have a severe financial impact on your business and take a long time to recover from. Be sure you’re ready to act immediately if evidence arises. Let us help you set up defenses against fraud and assist you in any investigations that come up.