Weekly Blog 10 - Expert witness in court

As a forensic accountant, there may be instances in your career where you are called into court to act as an expert witness with your written expert report. Your integrity and credibility as an expert witness rests upon how strong of a report you have produced regardless of all the court procedures, professional conduct or standards you follow.

In my opinion, I believe that process of writing up the written expert report is far more critical and difficult than providing verbal evidence in court. This is because firstly, procedure of gathering, analysing, reviewing evidence is very time consuming, depending on the case size, there could be a whole IT system you would have to do a full analysis on. In addition to writing up the report, it is your role as the expert witness to avoid any form of bias as your obligations are towards the court, not your client. On the other hand, providing verbal evidence can be just as difficult , this depends on certain factors. The most important contributing factor would be how well written the report, a bad report with holes/weaknesses in it is very difficult to defend, combined with an experience barrister could discredit your entire report useless. That is why you need to firstly, create a report within the best of your ability and secondly know your report off by heart.

Recently I was given the opportunity to attend a mock trial, definitely an experience I will remember for a life time. It was incredibly insightful observing the interactions between the judge, barristers and other students acting as an expert witness, however, when it was my time to sit in the witness box, it was one of the most daunting experiences I have ever experienced. Providing evidence in chief was the easy part but when it came to the cross examination, it appeared as though my inhibition to think logically flew out the window, trying desperately to defend my report proved pointless. The barrister in cross examination managed to turn my own answers against me, leaving me dumbfounded, which I thought was an amazing feat to do. Another issue I noticed, even with me was misunderstanding or trying to understand the questions being asked, this is important because firstly, you would not want to give an answer that might discredit your report and secondly, making up an answer trying to defend your report will put you in a more detrimental position, it is better just to concede at that point.

(Akkeren, 2014)

If you are considering to be a forensic accountant as your career choice, it is best to expect that one day you will be engaged as an expert witness in court. An important recommendation I like to give to students about being an expert witness is that, with a lot of things in life, being proficient in an art or skill comes with practice, age and experience. Keeping up to date with the most recent standards, procedures and rules that govern forensic accountants and expert witnesses is also another recommendation I would make as the global environment is always changing in terms of; business, technology, legality and society.

Relevant links

Tips from litigators for expert witnesses during trial
                http://www.theexpertinstitute.com/preparing-your-expert-witness-for-trial/

References

Akkeren, J.V. (2014). AYB115 Governance, Fraud& Investigation: Week 12 Resources: The Mock Trial (PART TWO). Retrieved 22 May, 2015 from
                https://blackboard.qut.edu.au/bbcswebdav/pid-5636481-dt-content-rid-                3789658_1/courses/AYB115_15se1/Mock%20Trial%2C%202014.pdf

Weekly Blog 9 - Preventing fraud and risk management

The risk of fraud has drastically increased as a result from the development of social media and online trading, individuals are cautioned on fraudulent activity while they are on the internet. On the other hand, organisations do not face the same level of risk, but instead harbor a greater risk of fraud

An individual only has to worry about their own actions and the protection they put in place, whereas, an organisation has take into consideration the actions of internal and external parties in addition to the information system implemented with the correct mechanisms to prevent fraudulent activity. From past blogs, employees both higher and lower management will commit fraud under the right circumstances if there is enough pressure, opportunities and rationalisation present. External parties such as vendors can commit fraud colluding with employees to create false invoices. A major deterrent to fraud and corruption are the Internal Controls, a poorly implemented system will only assist in the increase risk of fraud.

As an individual, in my experience with fraud relating to social media and online banking, the risk is there but it is a risk I am willing to take as these things has become a way of living. The severity might be catastrophic on the Risk Assessment Matrix but the probability is perhaps seldom, as compared to an organisation which would most likely be likely or frequent.. To minimise these risks, it's important to have defense mechanisms put in place, such as strong passwords, use official websites and apps for Facebook/Banking and code tokens for online banking.

My recommendation to organisations is to follow or integrate one of the Australian documents relating to fraud prevention and risk management, for example, Standards Australia AS 8001-2008, Commonwealth Fraud Control Guidelines (2011) or COBIT 5. More specific recommendations would be a Code of conduct when dealing with online trading or social media and certainly the Corporate governance, making sure fraud prevent and risk management is implemented throughout the organisation.

Relevant links

Standards Australia AS 8001-2008
http://www.saiglobal.com/PDFTemp/Previews/OSH/AS/AS8000/8000/8001-2008.pdf

Commonwealth Fraud Control Guidelines (2011)
http://www.ag.gov.au/Publications/Documents/CommonwealthFraudControlGuidelinesMay2002/Commonwealth%20Fraud%20Control%20Guidelines%20March%202011.pdf

COBIT 5

http://www.isaca.org/cobit/pages/default.aspx

Weekly Blog 8 - Hot tubbing

Over the past several years, a highly debatable topic has risen on how an expert witness presents their report in court, known as concurrent evidence or 'hot tubbing', both experts (sometimes more) get together before the trial to discuss each other's report on areas they agree and disagree. This method of giving evidence does have its merits, however, others have criticised its usefulness.

After researching the topic at hand, in my opinion the most notable benefit concurrent evidence provides is drastically reducing court hearings which is supported by multiple professionals Croke (2013), Federal Court of Australia (2013) and Korda Mentha (2013). By creating a joint statement, this allows the court to bypass all the unnecessary time cross examining matters that they would agree on and focus more on the areas of difference from the reports (Croke, 2013) because on most occasions the number of differences only comes down to a couple points or points of principle in their expertise, as stated by the Federal Court of Australia (2013), thus using the courts time effectively and efficiently.

On the other hand, hot tubbing has seen some issues in its technique, a major one being that an inexperienced or passive experts can be dominated by another, this may result in the more "persuasive, confident or assertive expert winning the judge’s mind (Federal Court of Australia, 2013)", rendering the other expert report irrelevant no matter how good or factual it may be. Another small but important drawback to this process is that it is very difficult to find a time where both or all experts are available to discuss their reports (Korda Mentha, 2013), unlike the rare case of, Strong Wise Ltd v Esso Australia Resources Ltd, where there were eight expert witnesses together at one time.

In conclusion, I think that hot tubbing is a very beneficial alternative method in presenting your report, however, there are conditions that must be met before it can proceed.

Relevant links

Strong Wise Ltd v Esso Australia Resources Ltd
(2010) 185 FCR 149 at 175-176 [93]-[97]; [2010] FCA 240

Concurrent Evidence: New methods with experts
http://www.judcom.nsw.gov.au/publications/education-dvds/copy_of_education-dvd

References

Croke, A, Mallon, L. (2013). Hot-tub: lessons from Australia. Retrieved 2 May, 2015 from
                https://www.ashurst.com/publication.aspx?id_Content=9604

Federal Court of Australia. (2013). Using the "Hot Tub. Retrieved 2 May, 2015 from
                http://www.citewrite.qut.edu.au/cite/qutcite.jsp#apa-repts-corp

Korda Mentha. (2013). Some like it hot!. Retrieved 2 May, 2015 from
                http://www.kordamentha.com/docs/for-publications/issue-13-01-some-like-it-hot

Weekly Blog 7 - Interview techniques

Before presenting any evidence in a court of law, forensic accountants must abide by the strict rules that govern it. On the topic of evidence gained from an interview, the interviewer must comply to certain policies and procedures, not only to avoid a false confession but to avoid your evidence deemed inadmissible.

Firstly, the interviewer should follow the criteria set out in DEEWR, Australian Government (2012) Conducting Investigative interviews before conducting an interview, gather all information and evidence, assess condition of the interviewee and the corresponding safeguards, then implementing an interview technique. A worldwide approach to interviews, the REID technique is one of the most successful methods.

Set out in three phases, Phase 1 is all about fact finding, talk about background information on the case, to build a rapport and make the interviewee feel comfortable. The second phase is where the interviewer analyses the verbal and non-verbal cues through non-accusatory questions to establish a baseline for when the suspect is telling the truth. The third phase, accusatory in nature, is to ask provoking questions that would elicit a change in body behaviour to detect deception by analysing the verbal and non-verbal cues (Korda Mentha, 2011).

(Plant, 2013)

I think that the REID technique is effective because people will always have a sign of when they are lying, individuals are not inherently born to lie and giving that most white collar crimes are high status people, they grew up in a developed society. An alternative approach is the Motivational Interviewing, this uses the same concept as REID in rapport building but focuses more on empathy and cognitive dissonance to get a confession out of someone.

Relevant links

More on REID technique:
                https://www.reid.com/

More on Motivational Interview technique:
                http://www.motivationalinterviewing.org/

References

DEEWR, Australian Government. (2012). PUAPOLIV004A Conduct investigative interviews. Retrieved 29 April, 2015 from
                https://training.gov.au/TrainingComponentFiles/PUA00/PUAPOLIV004A_R1.pdf

Korda Mentha. (2011). Advanced interview techniques. Retrieved 29 April, 2015 from
                http://www.kordamentha.com/docs/for-publications/1105-      AdvancedInterviewTechniques.pdf?Status=Master

Plant, J. (2013). 3 ways to build rapport with a potential new client. Retrieved 22 May, 2015 from
                http://accountmanagementskills.com/3-ways-to-build-rapport-with-a-potential-new-client/

Weekly Blog 6 - Identifying and profiling fraudsters

When an individual commits fraud, it can usually be explained through Cressey's Fraud Triangle. However, in the case of massive fraud where top management is involved, for example, Enron and WorldCom, the fraud triangle does not cover all the variables. That is why with the help of two leading fraud theories, Differential Association theory and General Strain theory, will assists in the explanation.

General Strain theory suggests that an individual leads to fraud due to a strain in their life, this could be for a behavioural, environmental and social reason (Ramamoorti, 2008), which goes into detail to interpret the pressures in the fraud triangle. On the other hand, Differential Association theory proposes that people commit fraud in groups due to the association with a criminal environment, they seek social support from them as a result from a strain and gets influenced towards crime as criminal behaviour is learned not inherited (Albrecht, 2014). The criminal environment could be within the organisation or an external group, therefore an opportunity is present for individuals to commit fraud as detailed in the fraud triangle.

In my opinion, Cressey's Fraud Triangle does address both concepts of Differential Association and General Strain theory , however, to a smaller degree. General Strain goes deeper by suggesting that there is more pressure than just financial, an individual's personality is also a variable to consider and there are micro and macro strains. Differential Association deals with how individuals coerce in dealing fraud, whereas, the fraud triangle is on a individual basis.

(Akkeren, 2015)

The key to understanding why fraud, bribery and corruption are increasing is to know that it usually starts off with a pressure or strain, most fraudsters are first time offenders that have some sort of need, mostly financial so solving that problem could in the long term benefit an organisation.

Relevant links

Enron overview:
                http://content.time.com/time/specials/packages/0,28757,2021097,00.html

WorldCom overview:
                http://www.nytimes.com/2002/07/22/us/worldcom-s-collapse-the-overview-worldcom-files- for-bankruptcy-largest-us-case.html

Global profiles of the fraudster:                http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Documents/fraudster- global-profiles.pdf

References

Akkeren, J.V. (2015). AYB115 Governance, Fraud& Investigation: Week 7 Resources. Retrieved 22 May, 2015 from
                https://blackboard.qut.edu.au/webapps/blackboard/content/listContent.jsp?

course_id=_11681                6_1&content_id=_5376704_1&mode=reset

Albrecht, S. (2014). Iconic Fraud Triangle endures, Metaphor diagram helps everybody understand fraud. Retrieved 28 April, 2015 from
                http://www.fraud-magazine.com/article.aspx?id=4294983342

Ramamoorti, S. (2008). The psychology and sociology of fraud: Integrating the behavioral sciences component into fraud and forensic accounting curricula. Issues in Accounting Education, 23(4), 521-533. doi:10.2308/iace.2008.23.4.521

Weekly Blog 5 - Expert report formatting

In society there are a set of rules that govern how people go certain things, to determine what is right and wrong, this is important in order to create a civilised environment. Forensic accounts have establish a set of guidelines that follow the fundamental responsibilities in order to be a professional line of work.

The guidelines set out in Australia's Practice Note CM7 help reinforce the fundamental ideas forensic accounting, which can be found in APES 215, the foundation forensic accounting is built on; public interest, independence, competence and due care and confidentiality. CM7 paragraph 2.1 (c) requires the expert to show his/her area of expertise, which tie in with APES 215 paragraph 3.14 competence and due care, where a member shall only take an assignment in their area of expertise. Having a clear set of guidelines also creates uniformity to follow court rules and comparability in each expert report.

My experience with guidelines usually do with following a manual. Take for example building a furniture from IKEA, some people just throw away the manual and do it blind, however, it is recommended to follow the book. I would of course follow the manual because one mistake could ruin the whole thing, this also applies to CM7 and APES 215, not following the rules set in place have consequences I would rather not deal with.

Relevant links

Practice Note CM7
http://www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/cm7

APES 215
http://www.apesb.org.au/~apesborg/development/APESBCMS/ver1.3/uploads/standards/apesb_standards/13092014103232p2.pdf

Weekly Blog 4 - Know your enemy

Fraud will always be a threat an organisation faces, whether it be internally or externally. It is imperative measures are put in place to mitigate the risk of fraud and one method of detection is to have an understanding of what pressures a fraudster in committing a crime.

Identifying the drivers of fraud; opportunity, motivation and rationale, explains why a person commits fraud and in return helps come up with measures design to minimise fraud (KPMG, 2013). With the ever changing environment of technology, opportunities for fraud are steadily increase, prominent type of fraud now a days is cybercrime, ranging from malicious software, ransomware and stealing/tampering data. As a result, organisations are quick to adapt by understanding how it occurs and responding quickly through the policies and procedures of an IT governance framework.

There are hackers all over the internet and after researching about what they can do, it made me realised that my computer and even my mobile phone is not properly protected. Now I have anti virus and malware protection software, monthly back ups, weekly scans and cleanups, to some people this might be overkill but I would rather not have my various accounts hacked like my banking details, gmail etc.

References

KPMG (2013). Global profiles of the fraudster. Retrieved 9 April, 2015 from
http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Documents/fraudster-global-profiles.pdf