Internal company fraud investigations

The following Corporate Crime practice note provides comprehensive and up to date legal information covering:

  • Internal company fraud investigations
  • Preliminary steps
  • Taking early steps to identify and protect privileged material
  • Indicators of fraud
  • Fraud by a third party
  • Internal fraud investigations
  • Consider privilege issues throughout
  • Self-reporting conduct
  • Company fraud prevention

Internal company fraud investigations

Preliminary steps

Before any action is taken it is important to consider:

  1. what is the event which has created the suspicion of fraud in the company?

  2. what is the financial impact this has had on the company—what is the loss?

  3. when and how did this loss occur?

  4. who is responsible for this loss?

  5. is there any evidence pointing towards the involvement of the person responsible?

Taking early steps to identify and protect privileged material

Carefully consider which documents may be protected by LPP. See Practice Notes: Legal professional privilege in criminal proceedings, Maintaining privilege during criminal investigations and Claiming LPP in respect of documents subject to a s 2 notice.

Where multinational companies are concerned, consider also Practice Note: Issues of privilege in cross-border criminal investigations and International legal privilege and professional secrecy—overview.

Indicators of fraud

There are types of behaviour which may be indicators of fraud within a company. Where internal fraud is suspected within the company in respect of an individual or team, the following indicators should be considered:

  1. is there a genuine contractual basis for an payments? Do any agreements raise any contractual concerns?

  2. what systems or controls are in place to oversee/manage contractual arrangements?

  3. are there appropriate antifraud policies in place and have they been followed?

  4. are there unauthorized side-letters or verbal arrangements?

  5. are profits being accounted for properly?

  6. have audit results been

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