Tips for Conducting Internal Fraud Investigations

Decisions made at the beginning of an internal fraud investigation will either enhance the possibility of a swift and successful resolution or pave the way for a costly and drawn out legal saga that could paralyze the company. This article lays out steps to avoid critical mistakes.

As, general counsel, you should be involved from the beginning of any internal investigation. The sooner you are involved, the sooner you can begin taking steps to protect the company and yourself. Limit the number of people who know about the fraud inquiry to a need-to-know basis. When only a small number of people know about the issue, it’s less likely that perpetrators will be tipped off and have the opportunity to destroy evidence. Maintaining a closed loop also protects the organization and reputations of those accused. Preserving key information (including documents, financial records and emails) is important for establishing potential fraud. It also protects your firm against allegations of not fully cooperating – or worse, covering up.

Among the most important considerations is figuring out when to bring in law enforcement. Keep in mind that once you have handed over the investigation, it is impossible to retake control.

Getting to the bottom of suspected fraud within your organization can be difficult enough without compounding the situation through easily avoided mistakes. Understanding these factors will enable you to act quickly and with confidence toward the best possible resolution of your situation.