Early this week, I read an article in the New York Times about a fee dispute between the law firm, DLA Piper and Adam H. Victor, an energy industry executive. DLA Piper is accused of overbilling, a practice referred to as “churning”. The story sparked off discussion about the billable hour regime and ethics in law firms, DLA Piper in particular. It is a shame that the actions (and emails) of this firm and a few others, tend to sully how people view firms that work on a billable hour basis. However, this article had me thinking about something else – the varied tools used by lawyers and litigation support, including forensic accountants.
The general expectation when one hires an accountant, forensic or otherwise, is that the only items one needs to hand over are financial records. This is an erroneous assumption. In order for a financial forensic expert to adequately investigate a case, the expert often must look beyond the numbers to discover what happened. A forensic accountant’s investigations may include interviewing employees at a workplace, reviewing contracts and, yes, sifting through emails.
For example, when investigating possible fraud in a company, and interview may bring forward a whistleblower. The whistleblower will provide valuable information that goes a long way toward uncovering fraud. Almost always, the perpetrator of fraud goes to great lengths to hide their crime. The interview process can help gather information that may, for instance, expose where improper entries are being made to financial records in an attempt to hide fraud. A good forensic accountant will know to ask questions that lead to information that an interviewee may not even know is relevant. Sometimes, a skilled forensic accountant will get the perpetrator of a fraud to implicate themselves. Armed with the information gathered from interviews, the forensic accountant can then better follow this information to an audit trail and obtain corroborating evidence.
So, when you are dealing with a forensic accountant don’t put them in a box and assume they only need financial records. You will most likely find that they are looking in more places than you could imagine financial fraud could hide.