Fraud Examination, 3E

Chapter 8: Investigating Concealment

COPYRIGHT © 2009 South-Western, a part of Cengage Learning

Learning Objectives• Describe concealment investigation

methods and how they relate to fraud.• Understand the value of documents and

electronic records in a fraud investigation.• List the different methods of obtaining

documentary evidence.• Understand how to perform discovery

sampling to obtain documentary evidence.• Explain how to obtain hard-to-get

documentary evidence.2

Aspects of Documentary Evidence Investigators must understand the following

aspects of documentary evidence: • Chain of custody of documents• Marking of evidence• Organization of documentary evidence• Coordination of evidence• Rules concerning original versus copies of

documents

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Aspects of Documentary Evidence Chain of Custody of Documentsa record must be kept of when a document is

received and what has happened to it since its receipt

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Aspects of Documentary Evidence Marking the EvidenceA transparent envelope should be used to

store the evidence, with the date received and the initials of the examiner written on the outside

A copy of the document should be made, and the original document should be stored in the envelope in a secure place

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Aspects of Documentary Evidence Organization of the EvidenceEvidence database should have the

following:• Dates of documents• Sources of documents• The dates on which documents were

obtained• Brief descriptions of document contents• Subjects of documents• Identifying or Bates number

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Aspects of Documentary Evidence Original Documents versus Photocopies• Originals are preferable to photocopies• In certain jurisdictions, only four situations

permit photocopies

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Aspects of Documentary Evidence Obtaining Documentary Evidence: AuditsAuditors conduct seven types of tests

(1) Tests of mechanical accuracy (recalculations)(2) Analytical tests (tests of reasonableness)(3) Documentation(4) Confirmations(5) Observations(6) Physical examinations(7) Inquiries

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Aspects of Documentary Evidence Obtaining Documentary Evidence: Discovery

Sampling

**Use full-population sampling to avoid when frauds may exist in only a few records

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Sample Results

Inferences about the Population

Aspects of Documentary Evidence Obtaining Documentary Evidence: Hard-to-

Get Documentary Evidence

Three ways to obtain documentary evidence: 1. Subpoena2. Search warrant3. Voluntary consent

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