Jean-François Legault, a lead fraud examiner at Deloitte, was investigating a client case, and he knew that an executive was hiding corporate funds. But he didn't know where the money was going.
In a traditional fraud investigation, there would have been a lot of interviewing and reviewing of documents. However, in this case, Legault and his team simply seized the suspect's computer. Then, using forensics analysis to review the hard drive, Legault's team followed the data trail on e-mails and documents and were able to see accesses to online bank accounts and bank statements. Further analysis of the digital evidence led the investigators to the amounts that were being transferred out from the company which matched them perfectly with the amount in the executive's bank statements.
This case illustrates exactly how fraud - and the fraud examiner's role - have evolved.
"Our role is changing in the fact that we see fraud being perpetrated in a new manner everyday via malicious software, banking trojans and online theft," says Legault, senior manager, Forensics & Dispute Services at Deloitte. "Technology is acting as an enabler for both the fraudster and investigator. As the fraudster uses technology to commit fraud, they leave a trail of bread crumbs on the computer they used, that we can, in fact, recover and follow."
Evolution of Fraud Examiner's RoleIn the late 1980s, fraud examiners did not exist. There was wide disparity in the way fraud cases were handled, no best practices, and most of the time nothing was done about incidents.
"When I first started working, most fraud cases were in the hundreds of thousands of dollars, and if you got anything close to a million dollars, you had a massive fraud," says James Ratley, president for the Association of Certified Fraud Examiners (ACFE), an anti-fraud training and education organization. "In today's market, nobody really pays much attention to anything that's not in the millions or even the billions. Plus with computers and identity fraud, it's so much easier to steal."
Over time, the occurrence of fraud became so frequent and expensive that organizations were forced to deal with it. Thus came the position of a fraud examiner in corporations. This role is mainly charged with combating a broad range of corporate crime, including classical financial schemes such as embezzlement, illegal disbursements, check fraud, money laundering, waste and abuse of corporate resources.
As a healthcare industry auditor and fraud examiner, Tamara Turner has seen the profession evolve from finding fraud retrospectively to having an active fraud task force within organizations that proactively works to prevent and detect fraud.
"Today we have set processes in place to identify fraud, to know which law enforcement agency needs to be notified and which business executives contacted to escalate the issue and discuss ways to prosecute a fraudulent case," Turner says.
Within healthcare, the reforms and initiatives around Medicaid, Medicare and the transition to electronic health records are shaping the profession, as corporations are pushed by regulatory obligations to invest in human capital and software technology to fight fraudulent activities. "We are getting aggressive in analyzing patterns of fraud types and researching information upfront to determine whether or not a fraud is committed," Turner says.
Career OpportunitiesKathy Lavinder, president of Security and Investigative Placement Consultants, a retained search firm, finds a whole array of opportunities for fraud examiners both in the public and private sectors.
"The job market is exploding for professionals who are conversant with business executives and know how to follow a data trail and review digital evidence," she says.
Healthcare organizations and banking institutions have full-time corporate roles for fraud examiners within their auditing and anti-fraud departments. In addition, individuals with forensic capabilities are in high demand with law enforcement, government agencies, defense contractors and private consulting companies.
The average salary for a fraud investigator is around $67,000 (Indeed.com) which has a high potential of increase with forensics and other software capabilities.
Legault's advice to individuals starting out is to build their technical skill sets in collecting and analyzing digital evidence by working in a technical role that gradually transitions into the business side.
"Examiners need to know how a check is issued or what a bank reconciliation is and translate that to the technological requirements needed to follow the data trail and find where the evidence resides on systems," Legault says.
Also, Legault and Turner both encourage practitioners to either take up professional certifications, such as the Certified Fraud Examiner's (CFE) credential or the Certified Forensic Computer Examiner (CFCE), or go through formal academic programs offered by universities, including Utica College, University of Rhode Island and Champlain College, that specialize in fraud management, forensics accounting and investigations both at the bachelor's and master's level.
5 Skills for Fighting FraudAccording to the experts, these are the five must-have skills for today's successful fraud examiners:
- Understand the Business: Major responsibilities for fraud examiners today include understanding the business side of information technology. They need to work with software and actually write business rules and processes that help in looking for potential fraud types.
For example, take the case of an obstetrician that bills for eight ultrasounds on an average for each patient, when in fact the industry norm is four. Here, the examiner will need to know the healthcare industry and business norms and accordingly set rules on the software to track anomalies and review information that stands out over time to identify a fraud.
"To be effective today a fraud examiner needs to become somewhat of a liaison between the business and technical side of things," Turner says.
- Leverage Technology: Examiners need to understand how to follow a data trail, use case tools, review digital evidence and conduct forensic analysis. The main challenge for fraud examiners is getting access to relevant information quickly and keeping up with crime itself, Legault says.
For instance, Legault relates a client case that involved theft of source code from a source code repository. In investigating this fraud, Legault and his team identified how the copy occurred and where the source code was affected. They reviewed all the client's systems by performing forensic imaging and making bit- by-bit copies of the system to actually view both the live files and the deleted files to understand from where the breach occurred.
- Have a Versatile Work Experience: Lavinder finds her clients in government and private sector looking for individuals that have combated a broad range of fraud cases. "They look for in-depth true investigative experience and not simply the oversight of this function," Lavinder says. "They want people who are hands-on and have worked in different settings and are exposed to handling a range of vulnerabilities and fraud scenarios."
- Understand Where the Information Resides: Successful fraud examiners need to possess a strong corporate background and understand the inner workings of a company and the infrastructure of an organization. Because when examiners are looking for evidence, they should know where information resides quickly. "Is it on a server, BlackBerry or laptop? This sounds simple, but if we're conducting an investigation, you need to act and think quickly, so you get all your sources of evidence," Legault says.
- Possess International Capabilities: Lavinder finds her clients operating internationally more extensively now, and therefore she seeks examiners with international capabilities and work experience - especially in developing countries. Individuals who have an understanding of different privacy laws, security standards and frameworks, in addition to speaking different languages, are a huge plus in the hiring industry, she says.
"Fraud is changing as fraudsters are getting more creative," Lavinder says. "So individuals with multidisciplinary backgrounds, open to travel internationally that can understand, utilize and bring value to business automatically become a desirable candidate for such positions."