COVID-19: Conducting fraud investigations COVID-19: Conducting fraud investigations COVID-19: Conducting fraud investigations

Why it is important to continue to investigate during COVID-19? Here are some practical steps to assist investigators in overcoming physical distancing.

KPMG’s COVID-19 Fraud Survey revealed 42 per cent of respondents believed their ability to investigate fraud and corruption had been inhibited because of coronavirus (COVID-19). Operating in a COVID-19 environment has highlighted multiple challenges for investigators to overcome when conducting investigations.

Physical distancing measures are restricting the way that we traditionally approach investigations, and the current circumstances mean that we must rethink how we gather evidence and interview. Here we discuss the current challenges for investigators, and how investigation strategies could be adjusted.

Our businesses and normal operations are disrupted, with most operating in crisis mode. This means that investigations may be paused or have failed to start as resources are diverted. This is significant, and while it may be tempting to stop investigations while your organisation is under pressure, it is important that this work continues.

Where an instance of fraud, corruption or serious misconduct is identified, it is integral that you undertake the necessary investigation to determine whether the allegations are substantiated or not, as highlighted in our Fraud Survey on managing fraud and corruption.

Investigations are shown to deter or disrupt other potential inappropriate actions and assist in setting the tone during uncertain times. This is a practical and important deterrent when you consider that 83 per cent of survey respondents believed the risk of fraud and corruption will increase during COVID-19.

Perhaps this view that fraud risk has increased dramatically is borne out of experiences during the Global Financial Crisis (GFC). KPMG’s 2010 Fraud & Corruption Misconduct Survey showed that the value of fraud detected in Australia had more than doubled in the second half of 2009, potentially reflecting fraud events that began during the GFC.

Below, we provide some practical tips to assist investigators navigating the challenges of COVID-19 and enable investigations to continue.

• Reconsider your investigation plans now with a COVID-19 lens. Consider whether you can make use of electronic sources of information and evidence which may be able to be accessed remotely.
• When conducting enquiries, consider whether physical attendance is essential and assess COVID-19 risks at workplaces, homes and other locations prior to attendance to minimise risk for all parties.

Most investigations will involve interviewing witnesses, but depending on the type of investigation being conducted you may be required to prepare witness statements. Below are some considerations when managing and interviewing witnesses during social distancing and remote working.

• While it is best practice to interview a witness, or obtain a witness statement face-to-face, telephone and video interviews may be utilised to prepare a draft of the witness statement and manage the witness remotely.
• Consider that the witness may be unable to sign their statement (for example, if they are in isolation). In this circumstance, confer with your legal advisor as to whether unsigned statements may form part of the investigation material.

The way in which you record an interview will vary depending on the type of investigation being conducted. Some general tips for interviewers where there is suspected improper conduct.

• Consider conducting your interview over video, rather than telephone, and record it. Ensure that your approach to recording the interview is compliant with the laws in your state or territory. If you are conducting an interview for a matter which may go to court, discuss your approach with your legal advisor to avoid the interview being deemed inadmissable.
• If you must conduct the interview face-to-face, consider using a third party location, keep physical distance, limit time in enclosed spaces and increase hygiene procedures (consistent with relevant medical advice).
• If you use video to conduct the interview, your interview strategy will need to take into consideration that you may not be able to properly assess the subject’s body language. In these circumstances, careful planning and proper questioning techniques will be key to your success. The structure of your interview plan will be dependent on the circumstances surrounding your matter, however, you may need to consider how you might present evidence or documents to your subject prior to commencing the interview. Prior planning and effective questioning will be key to achieving your interview objectives. As per usual interviewing techniques, we suggest avoiding the use of a predetermined list of questions, as this rigid approach tends to be restrictive and counter-intuitive to the interviewing process. Standard conversation management techniques are still the recommended approach when conducting interviews remotely.
• Consider how you will present evidence to the subject, and whether sharing of documents over email or video conferencing software will be sufficient in your circumstances. You may like to consider third party software that allows the use of screen sharing to facilitate the process of showing electronic evidence. In making this decision you should consider: the particular circumstances involved; the seriousness of the allegations; and the volume and complexity of the evidence. You will need to ensure that the subject understands which documents you are referring to, and that they have the ability to review and reference the material. You should also ensure that you are able to maintain proper continuity of your exhibits and evidence. It is recommended that strict adherence to the exhibit naming conventions are observed. This is to ensure that the evidence is identifiable in any future proceedings and that the evidence being discussed is clear and not confused with other similar exhibits. If your evidence contains original documents, handwriting samples, or is particularly voluminous, conducting the interview remotely may not be advisable. In such cases you may wish to consider a face-to-face approach taken to standardised interviewing procedures.
• Ensure that you are satisfied that the interview is being conducted in an appropriate setting, and that you know who else is present. Establish the identity of the subject at the beginning of the interview. The subject could share identification (such as a driver’s license or passport) while on video.
• Make sure you record the consent of the subject to participate in a video interview and address any concerns on the recording.