How To Conduct A Business Fraud Investigation For Protection

There are various ways to conduct a business fraud investigation for protection. Over the past few years, businesses have lost more than $7 billion globally due to fraud and abuse. All companies are at risk of deceitful scams from employees, consumers or vendors. As a business owner, protect yourself against fraud by knowing how to start a business fraud investigation. With a successful investigation you can increase the chance of recovering loses, reduce reputation damage and minimize legal fines. Follow these steps to conduct a business fraud investigation to protect your company.

Identify An Allegation

First, identify an allegation when conducting an investigation for business fraud. Investigations start with a formal allegation, where about 40% of allegations coming from employees. Of course, allegations can be reported directly to the compliance department, management or law enforcement. Fraudulent activity, such as a securities fraud, can be uncovered and identified during any routine internal or external audit. Reporting fraud claims can cause sensitivity and feats over retaliation. As a result, you can establish an anonymous submission method where individuals can report allegations. Any allegation, whether written or verbal, submitted to you, management and your compliance team should be addressed immediately. Document the allegation and report it to the appropriate groups for further investigation. Start your business fraud investigation by identifying an allegation.

Assess Risk

Secondly, when conducting a business fraud investigation, assess the allegation risk. Determine the severity of risk by completing a third-party risk assessment. Develop the assessment by collaborating with business leaders to test potential fraud risks, including supply chain risks. Apply business-specific data analytics along with forensic research options to test internal fraud defenses. More so, utilize company segments, geographic effects and government relations to identify company-specific fraud vulnerabilities. Of course, when the assessment is complete, you can create a fraud risk matrix. As a result, you can highlight operational strengths and weaknesses. Definitely assess the risk when conducting an investigation for business fraud.

Create A Team

Next, if you have assessed the risk and plan on carrying out an investigation, you need to create a team. Of course, before assembling your team, make sure each member is clear of any fraud involvement suspicions. Base your team size off of the scale and severity of the alleged fraud. Keep your internal team as small as you can and only expand if needed. Besides relevant board members, add a member from HR, a public relations advisor and a lawyer to your team. Certainly, you can use your company’s lawyer or find one through lawyer marketing tactics. Additionally, you can include your company’s auditors and IT specialists. These members will handle media issues, ensure confidentiality among team members and preserve electronic data. Surely, you will need a team to help conduct an investigation on business fraud.

Investigate Internal Data

Then, with your team, investigate internal data to manage business fraud. Start by reviewing documents, data and previous interviews within the company. Review bidding documents, forms used when requesting proposals from potential suppliers, for proof of corrupt influence. Influences can be corrupted through the manipulation of selection, pricing, quantity, quality and delivery (SPQQD) elements. Additionally, you need to examine these bids, proposals and CVs that were submitted by suspicious firms. As a result, you may be able to pinpoint which firm has possible fraudulent representations. Furthermore, you need to access related e-mail and hard drive data. Of course, you need the proper authorities to do so. Certainly investigate internal data when trying to control business fraud.

Take Legal Action

Finally, once you have found the correct suspect, complete the business fraud investigation by taking legal action. Reach out to the responsible party and request the return of your client’s funds. If they refuse, you can partner with legal representatives, law enforcement and regulatory authorities. Provide them with a report including all the information, data and proof you have collected during the investigation. It acts as a simple roadmap integrated with complex schemes, supported by a licensed investigator’s testimony. As a result, this report becomes a vital tool for all criminal prosecutions and civil litigation. Of course, complete the investigation for business fraud by taking legal action.

There are several steps to follow when conducting a business fraud investigation for company protection. First, identify an allegation submitted by an anonymous source, an employee, client or vendors. Secondly, assess the allegation risk through a third-party risk assessment to identify company-specific fraud vulnerabilities. Next, create a team of trusted individuals including an HR member, a lawyer and a PR advisor to handle the investigation as smooth as possible. Then you can investigate internal data to find potential suspects through revealing documents, data and communication sources. Finally, take legal action to get client’s money back and to repay the funds lost during the investigation. Follow these steps to conduct a business fraud investigation for protection.