Learning the art of fraud examination

CFEs love fraud examinations that move in a linear fashion — from the general to the specific, gradually focusing on the perpetrator through evidence analysis. But life, of course, seldom moves in a straight line.

Consider a case worked by Robert Hogan, CFE, who owns a fraud examination and forensic accounting practice, Hogan Consulting Group.

“Because my clients typically do not have formal fraud response policies and procedures in place, I often run into situations where the initial response to suspicions or allegations of fraud may be mishandled,” Hogan says.

“For instance, a branch of a large company received an anonymous report that an accountant in the branch was overcharging clients and then diverting those overages to a personal account when clients made their payments,” he says. “Upon receiving the tip, the branch manager confronted the accountant, which lead to an argument in front of staff. The branch manager disengaged and contacted corporate HR, which gave the accountant time to return to his office and destroy accounting records that included evidence of the fraudulent activity.