The Fraud Examiner
Practical Application of Levels of Proof in Fraud Investigations
Sherman R. McGrew, J.D., CFE
Program Analyst, U.S. Transportation Safety Administration, (TSA)
Fraud investigations vary in size and scope. Some are resolved in a month while others can take years. All the work may be for nothing, though, if you are unable to effectively and impartially substantiate and communicate your findings to those in power.
There are three pivotal stages that can lend a framework to your investigation and help ensure your findings are accepted.
All fraud investigations begin with an allegation. It is vital that we, as investigators, understand the degree that an allegation needs to be proven within our organization. Unfortunately, very few organizations define the standards of proof they commonly
use. What follows is a methodology that can be adopted and put into practical usage.
It is important to understand from the outset what the various degrees of proof will be used in the investigation. As a general rule, these levels will fall into the following categories:
- Mere suspicion (10%)
- Reasonable suspicion (35%)
- Probable cause (51%)
- Clear and convincing (75%)
- Beyond a reasonable doubt (95%)
Remember that there’s no such thing as 100% proof. So what do these levels look like?
Mere suspicion (10%)
Mere suspicion is no more than a hunch or guess. Someone may believe that a fraud is taking place but is unable to articulate exactly why. “Something just doesn’t feel right,” is a common expression at this stage. Rarely is an investigation officially
launched at this level of suspicion. However, one can, and usually does, look a little harder in the interest of reaching the next level of proof.
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