Fraud Examination - Ch 8: Investigating Concealment

Perps conceal their fraud by:

• Covering their actions

• Obscuring evidence

• Removing red flag fraud indicators

Aspects of Documentary Evidence Handling:

• Chain of custody documents

• Marking of evidence

• Organization of documentary evidence

• Coordination of evidence

• Rules concerning orginal vs copies of documents

Chain of custody

A record of when the document was received and what happened to it since its receipt

Memoranda

Describes document receipt and status change

Marking the Evidence

Received documentary evidence must be uniquely marked for later identification

Document Database Essentials:

•Creation dates of documents

•Sources of documents

•Dates when the documents were obtained

•Brief descriptions of document contents

•Subjects of documents

•Identifying or Bates number

Bates number include the following:

• Defendent or plaintiff identifier

• Defendent or plantiff location identifier

• Unique document number

Discovery Sampling

A form of statistical sampling which permits auditors to make inferences to the population

Sampling risk

Possibility that the sample will not be representative of the population

Nonsampling risk

Risk that a finding will be misinterpreted

Evidence that is difficult to obtain:

• Web based emails

• Private bank and brokerage records

• Tax records