When employees GO BAD

Conducting internal investigations, part two: internal document collection and analysis


Fraud Basics

This FraudBasics article is adapted from part of the ACFE course, "Conducting Internal Investigations." For more information on this and other courses, visit Seminars. 

In any fraud examination, you'll amass evidence. Don't compromise the case - use only the best practices of internal document collection and analysis.  

In part one of this article, as a new internal auditor at Jenkins Manufacturing Company you discovered numerous red flags flying at full mast. So you decided to begin an examination. But now just two weeks into the case, you've already amassed scores of paper documents and electronic files. Before you go any further you have to understand the best ways to handle and analyze them.

Preparing for the courtsCertain basic procedures in handling evidence are necessary for acceptance by the courts. Two of the most important aspects of handling documents are chain of custody and marking evidence.

From the moment evidence is received, its chain of custody must be maintained to be accepted by the court. Official written records must be made when evidence is received and when it leaves the care, custody, or control of the examiner. This is best done through a memorandum stating:

  • the items received;
  • when they were received;
     
  • from whom they were received; and
     
  • where they're maintained.

    Also, record in a memo when the item is transferred to someone else. All evidence received should be uniquely marked so it can be later identified. It's preferable to initial and date the item; however, if this isn't possible, a small tick mark or other nondescript identifier can be used. If it's not practical to mark the original, place it in a sealed envelope, initial it, and date it.
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