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You have a growing sense that those red flags flapping are signalling company fraud. You can’t ignore it and need to act. What should you do?

Get legal assistance.

Avoid trying to figure things out for yourself. Mishandling a forensic investigation could result in a wrongful dismissal, a slander lawsuit, and negatively affect your chances of clawing back misappropriated funds. Or result in a drawn-out case which distracts you from your core business.

Advise key individuals.

The level of engagement could be dictated by the scope of the suspected fraud. Typically, you’ll need to discuss the pending investigation and process with Board members, internal audit, HR, and selected managers. Importantly, involve only those people who would play a role in the investigation.

Remove the burden of investigation.

Getting an experienced and certified fraud examiner involved is a vital part of the process. There is probably a mound of data to wade through and interpret and you’ll need to quantify the losses, preserve the evidence, and keep detailed notes as the case unfolds.

A professional fraud examiner removes the burden of managing the fraud investigation in-house as this process can quickly become tense and emotional.

Place employees on leave and restrict access.

Be guided by HR and your legal advisors before suspending an employee or restricting their access to the business, remotely and physically. This process is intended to preserve evidence, avoid distressing employees, and ensuring that the person does not ‘hit back’ at the company through destructive actions.

Check your insurance policy.

Get your CFO or broker to check your company’s insurance policy to see if you qualify for any claim relating to fraudulent activity. It is probable that the policy will have a tight notification window. Work with your legal adviser and fraud investigator to prepare the documentation required by the insurer.

Communications.

Keep your communications specialist in the loop as at some stage you’ll need to communicate to employees and possibly stakeholders, suppliers and even the media.

Remember that while a communication informs it also evokes emotions so compile any communications strategically. Because the matter is so sensitive, run it past the legal advisor, the forensic
investigator and HR before releasing it. The ultimate sign off should come from the CEO.

Fraud investigations can be stressful, tense, and complex but the impact of getting it wrong can set a company back. Act decisively when you suspect fraud, and let experienced professionals drive the process.

Mubesko Africa’s Smartryk Calitz, head of our Forensic Examinations team, was honoured as South Africa’s Certified Fraud Examiner of the Year 2023 by the ACFESA’s (Association of Certified Fraud Examiners, South African Chapter).

 

Smartryk Calitz
Mubesko Africa
smartryk@mubesko.co.za/a>
mubesko.co.za