Chicago (Aug. 5, 2003) -- During the course of a fraud investigation, perception and reality might be far apart, a CPA and Certified Fraud Examiner warned attendees gathered at a fraud conference here.
"A gap exists between our initial perception and reality," Janet McHard of Meyners & Co. in Albuquerque, N.M., told attendees at the Association of Certified Fraud Examiners' Annual Fraud Conference Monday. "We call that gap 'reality bites'."
"As a fraud examiner, don't over-promise," McHard advised. "Be flexible about your investigation. What you think you see might not be what you see."
Using a case study based on several real-life cases, McHard walked attendees through a scenario where almost everything that could have gone wrong in an investigation did. The client impacted the results of the investigation, put himself and others at risk of litigation, and evidence was destroyed, among other things. The result, McHard noted, was that the investigation fell short of proving the fraud suspected by the client, the firm overran its fee estimate because of the problems, and the client refused to pay the bill. After arbitration, the investigating firm recouped 50 cents on the dollar of the billed fees.
"The impact of the investigation may not be obvious, but it can be far-reaching," McHard said. "The real cost of a fraud examination is greater than anyone suspects upfront." She also warned CFEs to manage clients' expectations.
-- Melissa Klein
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