ENews & Tech Conducting internal investigations from a distance

Stay-at-home mandates may require a fresh perspective to perform corporate probes of potential fraud and financial crimes. Going remote offers some relief, but it requires meticulous planning and the right technology.

The outbreak of COVID-19 has left many organisations facing a welter of challenges. Like the virus itself, many of these problems are novel. For risk and compliance officers, one concern is that a chaotic climate could fuel fraudulent or corrupt behaviour, including financial statement fraud and insider trading. Detecting these kinds of actions, however, presents a peculiar problem: How do businesses conduct internal investigations in the midst of a pandemic?

Indeed, the current stay-at-home and social distancing orders in many states only add to the complexity of an already complex compliance environment. Such restrictions render physical interactions difficult, even impossible, in the near term. As a result, some types of investigations may need to be delayed. Others, though, require more immediate attention because they concern allegations of significant financial impropriety – for example, large frauds that implicate the integrity of high-level officers or management or are the subject of regulatory or law enforcement actions.

This means companies may want to consider alternative ways to continue investigations or initiate new ones. Companies also are considering which remote technology-driven solutions to use. Such solutions may help with data and information collection and analysis as well as provide virtual connectivity for interviews and collaborations.

The process for a remote investigation includes:

Planning.

Every engagement requires proper planning. However, remote investigations require additional consideration to achieve a smooth kickoff and execution. Beyond traditional scoping considerations, parties can think through limitations and nuances that may arise when conducting such investigations.

For one, organisations may want to identify the best approach for conducting interviews – whether by phone or video technology. In addition, it’s important for them to determine if the business’s online site is secure enough to exchange electronic documents – or if relevant documents are even digitised – and identify the best way to obtain images of desktops and mobile devices. Another consideration: Will local and federal courts even be open to retrieve business corporate registries and individual civil and criminal records?

Investigative interviews.

Although teleconferencing and videoconferencing have become common for most businesses, attorneys and investigators may need to carefully weigh the advantages and disadvantages of conducting interviews remotely. Many software programs offer document sharing and face-to-face communication capabilities, allowing interviewers to observe interviewees’ reactions and assess credibility. Still, for certain critical or essential witnesses in cases where timing is not urgent, in-person interviews may be the preferred route because the circumstances of the discussion – including environment, pace, and ease of access to potentially voluminous documents – are more easily controlled.

Adaptive and experienced investigators.

Interviews held over the internet or via telecom lines may be more common than in the past, but challenges persist. Stabilising audio and video connections and being unable to share documents efficiently, among other issues, can heighten frustrations. Investigators who believe in-person interviews yield the best results may have to adjust their processes and techniques to accommodate virtual interactions with witnesses and others involved in internal probes. What’s more, interview subjects may lack the requisite equipment to enable videoconferencing, document sharing, or electronic verification.

The shift to virtual interviews will likely require investigators to be comfortable and adept at asking questions, reading physical cues, sharing evidence, and securing permissions in a virtual environment. And while their specialised knowledge and experience with forensic accounting, fraud schemes, and investigative practices are table stakes, an investigator’s ability to plan for contingencies – administrative, technical, and interpersonal – will be paramount in virtual settings. Experienced investigators and knowledge of relevant technological platforms are essential ingredients for an effective investigation.

Centralised tracking.

Leveraging a centralised custodian and matter-tracking system is pivotal in a remote investigation. Far-flung teams may have to rely on a custodian-tracking system as the single-source repository to monitor, report, and share information across workstreams in real time. In addition, teams may need to supplant in-person or live interviews by sending electronic questionnaires.

Interview responses can be captured quickly and fed into the system through automated import functionality, with aggregated responses immediately indexed and made searchable without manual review. Centralised tracking also enables stakeholders to leverage dashboards and other automated reporting functionality, thus bolstering remote workflow management and performance monitoring.

E-discovery collections and document review. Enterprise collections, such as email,

are mostly performed remotely these days. Thus, data collection in a virtual investigation should continue as usual. Custodian devices, which can be imaged remotely or shipped physically, present a larger – yet solvable – logistical challenge. After identifying relevant data sources, discovery specialists can coordinate with IT teams to access and download enterprise or cloud data sources. If an organisation’s current enterprise collection capabilities for PCs are in place, there should be little to no impact to gathering data. Otherwise, collections may require custodian notification, often increasing the risk that information may be deleted or destroyed.

In those situations, a typical approach involves mailing an encrypted hard drive preloaded with scripts directly to custodians to connect to their devices. Devices can then be accessed and controlled remotely, or even automatically, to securely extract and collect the data. Server e-discovery software further allows for the digital production, review, and tagging of documents.

Forensic accounting analysis.

Electronic access to ERP systems data and supporting documents is generally available for performing forensic accounting analysis remotely. Advances in data analytics have expedited the acquisition of large amounts of accounting and financial data, and predictive capabilities have dramatically shortened the time required to identify relevant transactions. In addition, secure share sites enhance collaboration between investigative and corporate teams. Moreover, secure sites can facilitate the transfer and review of potentially sensitive information – a prime consideration.

Business intelligence (BI) searches.

BI research is predominantly conducted through online databases and telephone interviews, except where court or business filings have not been digitised.

Whistleblower activity.

Tangential to internal investigations are whistleblower hotlines, the mechanism through which many acts of potential fraud and financial abuse are reported. Whistleblower protocols, an important component of compliance programs, can be an effective defense against malfeasance in virtual environments. Consider that as businesses become more virtual, so does compliance. Many of the in-person compliance controls used in physical workplaces, such as the monitoring of certain sales calls and investment trades, are not available in off-premise settings. Management may want to promote whistleblower hotlines to signal that the organisation is serious about anti-fraud measures and investigations and is ready to take action against potential malfeasance.