6 Best Ways on How to Conduct a Fraud Investigation

Fraud can take on many different forms, and it will always negatively impact a business. As a business owner, it’s possible to take measures to prevent fraud among your employees. However, it’s impossible to completely eliminate the risk of seeing your business being involved in a fraud, or falling victim to one.

If you notice some suspicious behaviours, or if someone accuses your business of fraud, an investigator will most likely be called upon to uncover what really happened, who was involved, and how they did it.

But what will the investigator do exactly? Of course, it all depends on different factors, but here are the basics on how to conduct a fraud investigation:

1. The situation will first need to be assessed

If you suspect that your business has fallen victim to a fraud, or that some of your employees might be involved in one, you will have to hire a fraud investigator. It’s best to hire an experienced private investigator Toronto from an outside firm, than to try to handle things yourself.

Some businesses decide to conduct their fraud investigation in-house, but they lack the knowledge and the resources to do it properly, and the whole process might appear as lacking objectivity.

The investigator will start by assessing the situation. Did a fraud really occur? Who is suspected? Which law or policy might have been violated?

After getting a better idea of the situation, the fraud investigator will move forward with their investigation.

2. The business owner should take action immediately

To conduct a fraud investigation, a business owner’s immediate action is a must. As a business owner, you obviously will have to cooperate with the investigator. You also have to take action as soon as possible to try to minimize the damage caused by the fraud.

If one of your employees is suspected of being a fraudster, for example, you should temporarily suspend them, with full pay, while the investigation is being conducted.

If one of your customers or business partners seems to be responsible for the fraud, suspend their account, and take any extra step you can take to prevent them for accessing your data or your funds.

This will not reverse what has been done, but it will help prevent further damage.

3. The investigator will collect and analyze evidence

The investigator will have to visit your workplace to collect data that can be used as evidence to understand, and prove what happened.

The data the investigator will search through can involve emails, banking transactions, databases, and hidden or password-protected document and files. They will look at your business computers, but also at any paper documents you might have, and any electronic support where they might be able to find the information they are looking for.

They will then analyze this evidence to gain a better understanding of the situation.

You and your employees will be expected to cooperate while the investigator is collecting evidence. If anyone refuses to cooperate, the investigator will be right to suspect they have something to hide.

4. Interviews will be conducted to gather more evidence

During the investigation, the investigator might also need to interview different people to try to gather additional evidence.

They could request to speak with witnesses, with people who claim to have information about the fraud committed, and even with the people suspected of being fraudsters.

One of the goals of these interviews will be to help the investigator determine the intentions of the fraudster, as well as the different opportunities presented to them.

The investigator will carefully prepare a series of questions before the interviews, to make the most of each of them. During an interview, they will take note of what each interviewee has to say, but they will also pay attention to body language and other cues.

5. The investigator will organize and secure the evidence

The investigator can use spreadsheets, charts and graphs to organize the evidence they have gathered. They will also put the events in chronological order, carefully noting the date of each meeting, email, telephone call, or other evidence related to the fraud.

This will help them analyze the facts to gain a thorough and objective understanding of the whole situation. Throughout this process, the evidence will have to be kept secure and confidential, to be sure no one can look a it without authorization.

6. The investigator will prepare and present their report

Finally, the investigator will prepare and present their investigation report. Depending on the result of the investigation, different responses might be recommended. Is this a criminal case that should go to court? Should the employee responsible for the fraudulent actions simply be sanctioned, or fired?

The report might also recommend different measures to be taken to prevent this type of fraud from being committed again.

It’s important to deal with the situation as quickly as possible, but being proactive is necessary to help protect your reputation as well as your bottom line.