Countering fraud through forensic talent

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Over the past few years, cases of fraud, bribery, corruption, cyber crime and other forms of irregular practices have been making headlines worldwide. The intensity and periodicity is increasing, and resulting in financial losses of possibly millions. Today, it could impact any organisation, sector, industry, or region, and is emerging as a key concern area in boardroom agendas.

What drives the perpetrators? Perpetrators of fraud are getting savvier and using sophisticated means to commit crimes. But what motivates them? Fraudsters can be led by many reasons, the biggest being greed. Gordon Gekko in the iconic movie, Wall Street, had said, “Greed is good”. It offers an easy way to derive financial gains—a windfall at times. Increase in an individual’s greed and wants can lead to a higher proclivity to perpetrate fraud. It may be to support a lavish lifestyle or be perceived as successful. Some of them maybe just risk takers, with a need to prove that they can beat the system. It could start from a simple situation where someone may inflate a cab bill to be provided as reimbursement, to cooking the account books. Others may just see it as a way of life, to get work done through ‘hustling’. A few others could be more ‘situational’, such as financial strain, pressure from shareholders, and pressure from seniors or even peers. The fact is that individuals will encounter multiple temptations, which could induce them to commit fraud.

Rise of anti-fraud champions
The prevalence of fraud has led to a rise in anti-fraud or forensic professionals who are skilled in combating white-collar crime and its perpetrators. They assist companies build anti-fraud and compliance frameworks, identify gaps in internal controls, and take adequate steps to mitigate instances of fraud in the future. Forensic professionals may address issues from a preventive or a reactive standpoint. The preventive measures include proactive risk assessments, building ethical frameworks, due diligences, background checks, etc. and the reactive measures include investigations and litigation, and dispute support.

Forensic professionals can be across diverse backgrounds, such as risk, compliance, internal audit, legal as well as core investigations. Chartered accountants (CA), certified fraud examiners (CFE), lawyers, post-graduates with business degrees, law enforcement personnel, technology experts, economists and engineers can contribute through their in-depth knowledge and on-ground experience.

To explain through an example, a whistle-blower’s complaint in a company alleges that a senior executive was taking kickbacks from a certain vendor. An investigation into the matter would require internal (or even external) forensic professionals who can scrutinise the evidence and decide the authenticity of the allegations. The team in such a case would comprise a CA or an MBA to understand the accounting aspect, a technology expert or an engineer to uncover the digital trail as there is a large dependence on sifting through electronic data. A lawyer or individual with a law enforcement background could highlight the violations and assist in evidence gathering. They could also be involved in uncovering any links between the two parties in question.

The Indian battle ground
In India, the forensic space is still a niche area but holds immense potential. Today, companies are building internal teams as well as working with external consultants to mitigate such fraud, bribery and corruption risks. In fact, the number of forensic professionals in India was less than 50 in the early 2000s. While there are no exact industry reports, the number of professionals in India would currently be between 4,000 and 5,000 professionals. Global anti-fraud associations such as the Association of Certified Fraud Examiners (ACFE) are involved in providing training and certifications to enhance the skill-sets, which would supplement practical knowledge of investigations. In fact, the ACFE Mumbai Chapter is contributing to building the ecosystem through the launch of a first-of-its-kind initiative to recognise forensic talent in India through the Forensic Trailblazer Award. Platforms like this will provide an impetus to the burgeoning space of these ‘specialist’ fraud fighters.

Conclusion
While beefing up security systems to tackle fraud, bribery and corruption is extremely crucial, the presence of dedicated professionals to handle such issues is critical. The future of investigation is bound to become even more complex, confidential and challenging. Hence, there is a need to build and develop this almost ‘new’ breed of anti-fraud professionals who possess the capabilities and conviction to combat fraudsters. The reality is, as fraud increases, the need for forensic professionals will also surge.

- By Mukul Shrivastava, Partner, Fraud Investigation & Dispute Services, EY India

The thoughts and opinions shared here are of the author.