The Financial Forensic Investigation Techniques and Procedures

Fraud is one major security element that is lagging behind the growth of any organization in the modern world. Fraud robes an organization its rightful acquired resources hence the need to come up with control measures to curb this vice.

Many organizations in the modern world have established security mechanisms to deal with any form of fraud both internal and external fraud. Internal control mechanisms are proving to be more effective when dealing with this vice. In most of the fraud cases in an organization, the master planners are the employees or people who understand the operation procedures of the organization well (Biegelman & Bartow, 2012).

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Internal controls have been integrated into business policies and procedures of most organizations. They are effective not only in controlling fraud, but also in protecting the resources of an organization against unnecessary waste (Bayens & Roberson, 2010). They ensure accuracy, reliability, secure compliance with the set organizational policies and at the same time evaluating the performance level of all the business units within an organization.

Generally, internal controls act as the monitoring body of all organization’s operations. It should be the responsibility of all organizational members to play some role in the implementation of internal controls for them to become more effective. This starts right from the management tickling down to junior members of staff whereby, all the members involved should be familiar with the control procedures pertaining to their job responsibilities.

The performance of internal controls mechanism set by a given organization is determined by the control environment, activities, risk assessment, information and communication. According to Goldmann (2010), these elements are normally referred to as elements of internal control. The control environment forms the backbone of internal controls performance consisting of integrity and ethical values, assignment of authority, formulation of policies and procedures in an organization.

Risk assessment is another major element that forms effective internal control mechanisms. This is well illustrated by the assessment of risks from both external and internal sources. It involves the identification and analysis of actual possible risks to achievement of the objectives. Risk assessment should be an ongoing process as the economics and the regulatory conditions keep on changing.

According to Comer, (2003), fraud can happen to anyone and a good case is that of New Scotland Yard where over ? 5 million was stolen by the deputy director of finance and concealed by writing fake payment vouchers.

This is a clear indication that most form of fraud is done by the associates of an organization including employees, customers, agents, suppliers and ex-employees who are motivated by greed. The auditing unit of an organization must identify pertinent information and communicate it in a form that will enable people to perform their responsibilities.

It has been identified that dishonest activities in an organization are done by organization associates and even if done by external individuals, there must be collaboration with the associates of an organization.

It is for this reason that its not wise for an organization to incur extra cost in contracting external services that provide security against fraud and maintaining an in-house department that is well equipped and positioned to handle such fraud. Internal controls measures have the capability of protecting, detecting and punishing the culprits involved without raising the alarm thus protecting the image of an organization to the general public.

This is done by formulating clear authorization procedures, segregation of duties, physical restrictions and monitoring operations (Silverstone & Davia, 2005).

In conclusion, it is evident that in-house controls can be more effective in the detection of possible fraud in an organization as opposed to outsourcing the same services. Internal security controls are also more economical and have the interests of an organization at heart if well equipped and managed.

References

Bayens, G., J. and Roberson, C. (2010). Criminal Justice Research Methods: Theory and Practice. New York: CRC Press.

Biegelman, M., T and Bartow, J., T. (2012). Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance. New York: John Wiley & Sons.

Comer, M., J. (2003). Investigating corporate fraud. London: Gower Publishing.

Goldmann, P. (2010). Financial Services Anti-Fraud Risk and Control Workbook. New York: John Wiley and Sons.

Silverstone, H and Davia, H., R. (2005). Fraud 101: Techniques and Strategies for Detection. New York: John Wiley & Sons.

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