Certified Fraud Examiners (CFEs) are highly skilled professionals who use their financial statement analysis and fraud detection knowledge to uncover hidden financial crimes. While many people think of CFEs as white-collar detectives, they can actually be involved in various investigations, including those into unknown or unidentified perpetrators.
This post takes a look at a few things that a CFE does during an investigation.
Investigates the Financial Statements of the Company to Identify Red Flags
Certified fraud examiners use various techniques to investigate the financial statements of a company for red flags that may indicate fraud. They are trained to identify things like unusual or unexplained transactions.
First, they compare the financial statements of the company against industry norms. This can help identify unusual patterns or activities that may be indicative of fraud.
Additionally, certified fraud examiners will often interview employees and review expense reports and credit card statements. It's not uncommon for fraudsters to try and hide their activities by using personal credit cards or making personal purchases on the company dime.
By investigating the financial statements and reviewing documents, certified fraud examiners can often get a pretty good idea of where the company's money is going — and where it's not.
Utilizes Forensic Accounting Techniques
Forensic accounting is the application of specialized investigation and accounting techniques to gather and analyze evidence of financial fraud. It is a field that has grown in popularity in recent years as the need for skilled forensic accountants has become more apparent.
Here, the work is often more advanced and involves extensive scrutiny of financial data. CFEs use their skills in computer forensic analysis to investigate electronic data, such as email communications and financial records. They also go through public records and other sources of information. This can be a valuable tool in uncovering hidden fraud schemes that an initial review of paper documents may have missed.
They may review transaction records dating back years to identify patterns that may have been used to commit fraud. In some cases, they may even reconstruct transactions that have been deliberately hidden or destroyed.
All of this information is then used to build a case that can be presented in court. In fact, CFEs may be asked to testify in court about their findings. This is another vital role that they play in the fight against financial crime.
For example, if a fraudster is caught and brought to trial, the CFE's testimony can be crucial in convicting the perpetrator. The CFE can help explain to the jury how the fraud was committed and what evidence was used to uncover it. Because of their expertise, CFEs are often seen as credible witnesses in court.
Forensic accounting is a complex and technical field, but certified fraud examiners have the training and experience to effectively utilize these techniques. Speak to a forensic accountant if you think you may be a victim of fraud or if you suspect that someone has been committing fraud in your company.Share