Part 2: Pitfalls To Avoid When Overseeing an Accounting Investigation
- Aug 10, 2017
- Marc Fogarty
In the previous blog post, Part 1: How Boards Can Effectively Oversee an Accounting Investigation, we covered some of the things companies need to do when conducting an investigation into an alleged wrongdoing anonymously reported by a whistleblower. Now, here in Part 2, here are some of the ‘don’ts.’
- Don’t do it alone. Accountants and board members do not have the same skill sets, so it is important to get the appropriate help when necessary. That being said, each type of violation and accusation requires attention from different experts, so choose accordingly. For example, hiring a securities attorney or a forensic accountant might not be helpful when addressing a criminal complaint. Assess the situation and enlist the right individuals for the task at hand.
- Don’t skimp on resources. There are many places to cut resources in companies; however, an investigation is not one of them. It takes time and financial resources to effectively and correctly conduct an investigation. Hiring a “lead investigator” is a central way to monitor costs in an efficient way; however, companies should not place limitations on resources the investigator requires.
- Don’t assume. There should be no presumptions related to the investigation until all information has been gathered and analyzed. Those conducting the investigation, as well as those charged with overseeing it, should possess professional skepticism and not jump to conclusions based on the person or persons alleging the claim or those accused. It is not uncommon for fraud cases to involve someone within the organization who is well trusted and been with the company for several years.
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Marc Fogarty, Audit Partner and National Biotech Sector Leader, within Technology and Life Sciences Group, and member of the firm's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.
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