REPORTING

Question 1

Each contact an examiner makes during the course of a fraud examination should be recorded on a timely basis in

Answer 1

a memorandum of interview

Question 2

You should reconfirm dates and supporting information with the respondent. It is important
to reconfirm the facts ____

Answer 2

before the report is written

Question 3

Clarity

Answer 3

Investigative reports on fraud examinations should convey pertinent information in the clearest possible language. If necessary, quote the respondent directly (provided the quotation does not distort the context). Convey only the facts; do not editorialise or give judgements. Use complex or technical terms in their proper contexts, and, where necessary,
explain their meaning. Do not use jargon since the report might be read by people who are not familiar with esoteric or technical terminology.

Question 4

Impartiality and Relevance

Answer 4

Report all facts without bias. Everything relevant should be included regardless of which side
it favours or what it proves or disproves. At the outset of a fraud examination, the examiner
should carefully determine what information will be needed to prove the case and attempt to
include only this information. A report should include only those matters that are relevant to
the examination. However, almost every investigation yields much information of which the
relevance is not immediately known. In such cases, it is best to opt for completeness.

Question 5

Timeliness

Answer 5

Timeliness of reports is extremely important because it tends to enhance the accuracy of
witness testimony. Another aim of timeliness is to preserve the examiner’s memory of the interview(s). All interviews should be transcribed as soon as possible after the questioning. Upon completing the examination, the examiner should prepare a final or interim report (whichever is appropriate) as soon as possible.

Question 6

Conclusions

Answer 6

based on observations of the evidence

Question 7

opinions

Answer 7

an interpretation of the facts

Question 8

The fraud examiner can avoid problems of evidence maintenance by

Answer 8

simply documenting—in memorandum form—the receipt or release of all evidence.

Question 9

When operating under a lawful court order that compels a custodian to furnish original documents, the examiner should

Answer 9

copy those documents (preferably in the presence of the custodian). Then the examiner should
furnish the custodian with a receipt describing the documents copied or taken

Question 10

After obtaining documents, the examiner should ___

Answer 10

secure them for evidence

Question 11

he most common types of note taking include __

Answer 11

manual, stenographic, and electronic

Question 12

Organisation of Information. Chronological

Answer 12

This method presents facts in the order in which they were uncovered.

Question 13

Organisation of Information. By Transaction

Answer 13

If a multitude of documents support several instances of fraud, this information should be
presented by separating individual transactions

Question 14

Under no circumstances should the examiner prepare a communication with the idea that

Answer 14

the information will not be disclosed to adverse third parties.

Question 15

A fraud examination should adequately answer the classic questions of __

Answer 15

who, what, why, where, when, and how

Question 16

Fraud examination reports will most likely be read by the following individuals.

Answer 16

Company Insiders 
Attorneys
Defendants and Witnesses 
Press 
Juries

Question 17

Write each report in a style that is __

Answer 17

clear, concise, and to the point

Question 18

The two cardinal sins of report writing are

Answer 18

vagueness and wordiness.

Question 19

Common breaches of good basic writing include:

Answer 19

• Improperly placed or ambiguous modifiers (changes sentence context)
• Use of technical jargon, slang, and/or colloquialisms (places the burden to understand
on the reader)
• Use of unnecessary, high-flown verbiage (in an attempt to impress the reader)

Question 20

Always use the ___ voice unless there is good reason to use the passive.

Answer 20

active (emphasis is on the subject)

Question 21

When writing a report, one should never use ___ to replace I or me

Answer 21

the writer

Question 22

Sentences that contain more information than the reader can comfortably absorb are known as

Answer 22

Rambling Sentences

Question 23

A run-on sentence is ___

Answer 23

two or more sentences without proper punctuation to separate them

Question 24

Do not omit a __

Answer 24

required verb.

subject

Question 25

Avoid compound sentences __

Answer 25

ontaining clauses that have little or no logical relationship to one another

Question 26

A modifier (a word, a phrase, or a clause) is misplaced when it

Answer 26

modifies, or appears to modify, the wrong word or phrase.

Question 27

Paragraph Structure

Answer 27

State a paragraph’s main point in its first sentence. Subsequent sentences should support and clarify that main point. For the purposes of report writing, paragraphs should be short.

Question 28

Report Structure

Answer 28

``` Background Executive Summary Scope Approach Findings Summary Impact Recommendations ```

Question 29

Background

Answer 29

The background section should generally be about two paragraphs. It should state very succinctly why the fraud examination was conducted (e.g., an anonymous tip was received, an anomaly was discovered during an audit, money or property was missing). You may also state who called for the examination and who assembled the examination team.

Question 30

Executive Summary

Answer 30

For a simple fraud examination, the executive summary should be no more than four or five paragraphs. For a more complex case, the summary may reach a page or two in length. In this section, you should also summarize what actions you performed during the fraud examination, such as reviewing documents, interviewing witnesses, or conducting analyses or tests. It provides the reader with an overview of what you did during the examination process. At the end of this section, you should summarize the outcome of the examination.

Question 31

Scope

Answer 31

This section should consist of only one paragraph explaining what the scope of the fraud examination was

Question 32

Approach

Answer 32

This section gives a brief description of the following items: • Fraud examination team members • Procedures (generally, what documents were reviewed or what tests were conducted) • Individuals interviewed

Question 33

Findings

Answer 33

This section contains the details of the fraud examination. It will generally consist of several pages. In this section you should describe what tasks you performed and what you found. Provide enough detail so that the reader understands what occurred, but not so much detail that the reader begins to lose interest or becomes bogged down in the details. The reader wants to know how many invoices were forged, who was involved, how they did it, and what proof you have. If the findings section is long, you may wish to use subheadings for particular topics or individuals to make it easier for the reader to stay organized. The information can be presented either chronologically or by topic—whatever makes it easier for the reader to follow.

Question 34

Summary

Answer 34

This section should be one or two paragraphs and should succinctly summarize the results of the fraud examination. It should be similar to the outcome stated at the end of the Executive Summary section.

Question 35

Impact

Answer 35

Here you should describe how the fraud affected the victim organisation. In this section you can provide an estimate of the dollar losses or any other time of tangible or intangible damage already suffered or that may occur in the future.

Question 36

Recommendations

Answer 36

This section is optional. There may be instances in which you wish to discuss remedial measures or specific recommendations in a separate document. If you do wish to include this section, you should state what follow-up action is necessary or recommended, including remedial measures such as a review of internal controls, introduction of a hotline, or increased security.

Question 37

The basic reporting documents are:

Answer 37

``` • Memoranda • Exhibits, documents, or enclosures • Indexes • Cover page • Transmittal letter The long-form report will consist of copies of these documents. ```

Question 38

Memoranda

Answer 38

Use memoranda to document all interviews and other pertinent information discovered during the examination. Each memorandum should contain the following information where appropriate: • Heading • File number or control number • Name of person reporting • Case name or subject • Subject of memorandum • Date • Details of facts • Interview was voluntary • Indicate that one provided one’s identity • The witness was informed of the nature of the inquiry • Date of inquiry • How the interview was conducted (in person, by telephone, etc.) • If the interview was electronically recorded • Facts learned during inquiry

Question 39

Cover Page or Letter

Answer 39

A cover page summarises the examination’s salient points. The cover page should be direct and succinct. If a report is submitted to an outside agency (such as law enforcement or outside counsel) , a cover letter should accompany it. The cover letter should recapitulate information in the report and summarise the principal weaknesses. It is not necessary to list all witnesses, only those most valuable.

Question 40

Exhibits

Answer 40

As a general rule, copies of exhibits should be included in the report and not attached separately. However, bulky files (including working papers and similar exhibits) might be attached separately and referred to in the body of the report. The chain of custody should be maintained over original documents.

Question 41

Forms

Answer 41

A complete fraud examination report must document every step of the information- gathering process. Because the orderly and legal presentation of evidence requires the examiner to organise a great deal of information, the examiner should use the forms available to facilitate this task. As a general rule, these forms are kept in the file and not included in the report unless necessary.

Question 42

Consent to Search

Answer 42

A consent to search form documents the fact that a person has been informed of his legal rights, stating that: • The premises cannot be searched without a search warrant • The person can refuse to consent to such a search The signatures on the bottom of the form (subjects and witnesses) indicate that the person is voluntarily giving the examiner written permission to search the premises and to remove whatever papers, documents, or other property he might desire.

Question 43

Receipt for Property

Answer 43

A receipt for property form is a multipurpose document used to list items of evidence that have been received, returned, or released. This form includes the following information: • Date of transfer • Property owner’s name • Owner’s address • Description of item(s) • Signature lines (“Received by” and “Received from”)

Question 44

Telephone Recording Consent

Answer 44

A telephone recording consent form stipulates where, when, and with whom telephone conversations can be recorded. This form states that the subject has granted permission without threats or promises of any kind and it must be signed by the subject and witnesses. Be cautioned that the form alone does not make the conduct illegal or legal.

Question 45

Consent to Record

Answer 45

A consent to record form documents the fact that an individual has given the examiner permission to record specific conversations. This form must be signed and witnessed. It details: • The name of the individual • His address • The location of the conversation(s) • Who might record the conversation(s) • The name of the subject(s) with whom the individual might converse • The date(s) of the conversation(s)

Question 46

Customer Consent and Authorisation for Access to Financial Records

Answer 46

This form authorises a financial institution to disclose the customer’s own records to the examiner or other specifically listed individuals. It must be signed by the account holder.

Question 47

Evidence Control Log

Answer 47

In the case of significant items of evidence, it might be advisable to prepare an evidence control log, a form that documents: • The evidence control centre location • The bank safe-deposit box location • Other evidence location • The signature(s) of person(s) placing in or removing evidence from repository • The reasons why evidence was moved • The file case number • The time(s) and date(s) authorised individuals entered and departed evidence Repository

Question 48

Link-Network Diagrams

Answer 48

show the relationships between people, organisations, and events

Question 49

Summaries of Witnesses’ Statements

Answer 49

Reduce voluminous testimony and witness statements to summary form in order to identify inconsistent statements and to permit quick review. To identify pertinent passages, indicate briefly the topic being covered at a given point, and provide a synopsis of the statement. Keep the synopsis as succinct as possible

Question 50

Engagement letters have four basic parts:

Answer 50

opening, body (long or short), terms, and close

Question 51

The Long Form

Answer 51

The examiner describes the procedures in detail and limits the scope of an examination to the procedures defined. It is not recommended for use in engagements requiring the investigation of fraud allegations and a concluding opinion on the existence of fraud. At the onset, the examiner might not know what procedures will be necessary to resolve the allegation. Consequently, it is difficult to describe, with any precision, the anticipated procedures before the examination begins.

Question 52

The Short Form

Answer 52

outlines the general scope of the engagement. he short form might also confirm if the examiner has access to any personnel or documentation deemed necessary to carry out the assignment. This type of engagement letter is best used for work that will ultimately require an opinion on a fraud allegation. Because the examiner will not know the nature of the alleged fraud at the onset, it is best to not limit the examination’s scope

Question 53

Terms

Answer 53

The terms paragraph includes the fee, either flat rate or hourly, and the method of payment. This is an excellent time to ask for a retainer and to describe the billing procedures. Also address the issue of out-of-pocket expenses. If travel is required, discuss the anticipated cost of travel and the number of trips.

Question 54

Close

Answer 54

In the closing section, thank the addressee for the opportunity to work with him. Provide a phone number where you can be reached and any special instructions, such as cell phone and fax numbers. Ask the addressee to sign one copy, and return it in the envelope. Don’t forget to supply a signature plate for the returned letter and a self-addressed stamped envelope.

Question 55

Indemnity Clause

Answer 55

The indemnity must be broad enough to cover the fraud examiner’s legal expenses, provide for independent counsel, and protect the fraud examiner from liability in case of an adverse finding, but it should also provide for the cost of time and expenses of the fraud examiner at the examiner’s usual hourly rate

Question 56

Opinions

Answer 56

The Certified Fraud Examiner is often asked for an opinion about the existence of fraud. He might be engaged to perform fraud deterrence services or to resolve a fraud allegation. In the former instance, the opinion will address the strengths and weaknesses of the client’s current fraud deterrence system and include recommendations to strengthen that system. If specific instances of possible fraudulent conduct are uncovered, those should also be addressed. In the latter situation, the examiner must be attentive to the Certified Fraud Examiner’s Code of Professional Ethics, in that: “no opinion shall be expressed regarding the guilt or innocence of any person or party.” There are three possible outcomes of a fraud examination: evidence was obtained that supports the allegation of fraud; evidence was gathered that does not support such an allegation; and inconclusive evidence was gathered. In the first outcome, the opinion will vary depending on whether the perpetrator confessed to the alleged crime. In the second outcome, the examiner can state that the evidence does not support the fraud charge. The examiner is not able to declare that there was no fraud. In the final outcome, the examiner can state that the evidence is inconclusive; it neither supports nor refutes the allegation.