How online (and offline) forensic investigations are carried out

Online financial investigation

Financial Investigations

Financial investigations represent the longest-established forensic accounting sub-discipline, encompassing enquiries into financial crime, tax investigations, money-laundering and hidden asset tracing.

With the rise in the volume and complexity of data over the last couple of decades, it has never been more important to conduct online forensic investigations effectively, and to make the most of all the available (and newest) technological tools. Having said that, there is then a great deal of work to be done behind the scenes away from online resources to ensure complete confidentiality of the subsequent examination of relevant information. This is the careful balance to ensure the most valuable resources for an investigation are properly preserved and protected.

At one time, forensic investigations would have involved sifting through endless boxes of paperwork as accountants and analysts looked for evidence among the data. These days, of course, thanks to technology it’s possible to inspect huge amounts of information in a relatively short time; which gives forensic accountants a lot more freedom to interpret data and study the relevant documents for a more accurate investigation and identification of evidence.

Because the necessary documentation can now be found more quickly, the process has become immeasurably more efficient and cost-effective, although clearly human input remains indispensable. Once the raw data has been stratified and assembled into subsets for further scrutiny, the natural intellect and reasoning of the forensic accountant become the defining elements of the final report which may well be used in court proceedings.

These days, forensic accountants need to be well versed in a wide range of methodologies, and understand how to use them to enhance their investigations, most of which require the use of a number of different techniques and critical thought to assemble the necessary information. It’s a complex process which requires appropriate training as well as relevant knowledge and experience.

Here are some examples of the technologies used in modern online investigations:

  • Optical character recognition (OCR)

This means forensic accountants can search documents for keywords and other information which are then sorted according to date or other ranges. This is particularly important for certain media storage where traditional word search including Boolean threads may not perceive elements of data without properly considered interrogation methods.

  • Artificial intelligence (AI)

This allows for much quicker data analysis than a human could do alone, which boosts efficiency and cost-effectiveness and enhances an individual’s contribution significantly. Some programs, especially algorithms, will learn from the user’s input, for example the way different types of documents are tagged – once again, this makes it quicker to manage and find documents in the system. AI is also useful to engage where different types of search parameters may need to be evaluated throughout the process and adapted to take account of shifting data profiles.

  • Cloud adoption

Thanks to cloud adoption, work can be more efficient, and finding the document which the forensic accountant needs becomes a much quicker process. Additionally, colleagues can collaborate remotely and share documents, wherever they are in the world and at any time, which again speeds up the relevant tasks. Note also, of course, that security is a major consideration for cloud-based systems, and forensic accountants are uniquely skilled at ensuring the data is not unduly compromised in online databases, retaining its validity for use as evidence.

Equally, there are some important and perhaps more traditional skills used as part of forensic investigations, but which may still involve the internet and modern technology, including:

  • Document reviews

Typically, an investigation begins with a review of the entirety of a business’s documentation, including anything legally and readily available online. Forensic accountants will also complete extensive company background checks using a variety of open-source intelligence (OSINT) and wider manual due diligence tools to interrogate the largest possible dataset for improved coverage.

  • Interviewing

These can be further invaluable sources of trustworthy information. However, there are specific protocols to be established ahead of any interview as these will determine the extent to which any subsequent information can be used as admissible evidence. It is important to identify the nature and scope of the interview, which may require a legal process through the courts, and all aspects must be thoroughly recorded as part of a forensic investigation.

  • Evidence analysis

This step will help investigators appreciate the extent of any fraud which may have occurred, and assess the scale of any vulnerabilities within the organisation. Further analysis will also indicate how well the company is protected against further incidences of financial fraud in the future, and will help to identify what preventative measures need to be put in place. If undertaken quickly, any loss of funds can be mitigated by the use of asset seizures or similar forms of injunctions to protect the owner’s claims.

In essence, therefore, after an initial client briefing and once the work has started, most forensic investigations use a combination of the techniques mentioned above to assemble critical information. They will then look for any exceptions and inconsistencies, by identifying a pattern of transaction flows to determine precisely the issues that need to be examined further and establish more accurately what if any unusual activity has occurred.

The investigation in turn is followed by a comprehensive report of all findings and, where litigation is involved, a forensic accountant may often serve as an expert witness to assist the court in its determination of the facts

How we can help

At Hayes Forensics, we love the challenge of investigations, including those which cross international borders. We aim to maximise what our clients can recover, and have a particular skill in finding hidden assets and income. Equally, we’re adept at combining innovative techniques including the newest digital processing with skilled analogue insight and analysis.

If you’re thinking about launching a forensic financial investigation, or even a less formal inquiry into a party’s dealings, get in touch today for your free consultation using our contact form.

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