FRAUD INVESTIGATION FRAMEWORK

Fraud investigation is not an easy matter. It requires a qualified and experienced investigator to conduct and complete an investigation. An investigation framework is important as it allows investigators to detect the incidence of fraud at its preliminary stage. It is a strategic plan and model which guide investigators to perform their tasks in a systematic manner in ensuring all important aspects, procedures and steps are followed closely. It also assures that the chain of documents and evidence will not be lost. In any fraud investigation, it is vital to first understand any report or complaint received. The report should provide the basis and direction of the investigation approach in the quest to find details regarding the facts of the case, the extent of the fraud, legal violations and the suspects. Investigators should always consider the 1H (How) and 5 W (What, Why, Who, When and Where) in every step of the investigation process to ensure that nothing is being overlooked.

Internal investigation can be summarized as followed and the details of each phase can be revealed in the flowing section:-
i. Problem recognition
ii. Investigation planning
iii. Method of Investigation
iv. Gathering evidence and analyzing available documents
v. Conducting interview and recoding statement
vi. Evaluation and preservation of evidence
vii. Reporting

The initial stage of the framework is identifying fraud exposure. This is considered as one of the most difficult stage as it is not easy to immediately identify fraud perpetrated by the top management of a company. Analyzing financial statement alone would not suffice to detect any fraudulent activity in a company. Thus, according to Albrecht et al. (2009), the fraud exposure rectangle is helpful in identifying management fraud exposure. Figure 1 illustrates the fraud exposure rectangle.


Adopted from ' Forensic Accounting and Management Case Studies' , a book co-authored by Azmi Abdul Hamid and Rozainun Abdul Aziz