Investigative Auditing: Finding And Retrieving What Is Yours

By Tom Gardner

When you lose your wallet or have your purse stolen, it is a big deal. Your money, your identity, your security are all gone, and your financial situation goes into Code Red. But you are just one person, with only so much money.

Just imagine that the same is true for a business, except that instead of a thousand dollars missing, it is hundreds of thousands, even millions. All things halt when money goes missing, and the dogs are sent out to trace the loot.

Finding and retrieving what has been stolen from a business is called investigative auditing. It is the forensic side of accounting. It is a skill that only a select few people have, as it requires not only knowledge of accounting but also the ability to perform investigative techniques. Below is an outline of what is involved.

Tracing the Money

When the money goes missing, the investigative auditors are called in to find the money trail and chase down the stolen funds. This is not only difficult, but very tedious work. It often isn’t as simple as finding which bank the money was put into. Perhaps the money is deposited in many accounts. Or perhaps the money is still in a suitcase. Regardless of where the money is at the time, it can be traced. This is due to the fact that all transactions are registered and accessible – if you know the right people. A investigative auditors job is to find the right people, uncover and follow the connections between each transaction, and map the trail. Then, once the money has been found, the auditors embark to recover the assets.

Bringing It Back

Recovering fully the stolen money is not as easy as finding where the money has gone. Often times an investigative auditor comes onto the scene a little too late. Like a crime scene investigator cannot stop the murder from taking place, but can perhaps find the murderer, so too works investigative auditing. It is understood that transactions have already taken place, as these transactions led to the money itself. The money has already partially been spent. So, full recovery of the funds is almost always impossible. Yet, partial recovery is always an option.

So when an investigative auditor goes on the hunt, they are looking to bring back as much money as they can. Yet, the company has already lost a significant amount and should weigh the cost of recovering the money. In the end, if the money and the thief are found, more money will be spent to seal the deal and quiet down the situation. Finding the money might not be worth all the effort, especially if only a small portion of the money is returned. Coming to the scene late is costly.

Prevention

The best way to use investigative auditing is to prevent large theft from happening by reporting and busting smaller thefts. A typical thief works his way up. He starts off small and then steals more and more, if he is not caught. Stopping him when he has only stolen a small amount could save a company millions. So, the best way to save money and stop financial fraud is through using investigative auditing in small matters, before a situation gets out of hand.

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