Forensic Services What are Forensic Services?     Forensic Services entail the application of analytical methodologies, presented in a way that the results obtained can be replicated by other experts, utilizing techniques, methods and or procedures generally accepted by experts, which are probative to a trier of fact, and which meet judicial requirements regarding admissibilty of evidence.   Forensics many times involve a combination of disciplines such as accounting, finance, economics and the ability to work with members of the judicial system in an objective and disciplined fashion.    Different methods can be utilized by a forensic expert depending on the type of damage incident, the parties involved and the reliability of financial data.  Valuation experts are often engaged to estimate monetary losses suffered by individuals or businesses. To do so, a forensic investigation of accounting records and underlying transactions is often conducted, resulting in preparing an assessment of business damges, if any, that may have been sustained Typical forensic services may involve mortgage fraud investigations, breach of contract actions, embezzlement, and financial statement fraud.  According to a study conducted by the Association of Certified Fraud Examiners based on data compiled from 1,134 cases of occupational fraud that were investigated between January 2004 and January 2006:

ACFE 2006 Report to Nation on Occupational Fraud and Abuse: Occupational fraud schemes can be very difficult to detect.   The median length of the schemes in our study was 18 months from the time the fraud began until the time it was detected. Our data supports the use of confidential hotlines  and other reporting mechanisms as a fraud detection tool.   Occupational frauds are more likely to be detected by a tip than by other means such as internal audits, external audits or internal controls.   The importance of encouraging tips is evident in cases involving losses of $1 million or more. Forty-four percent of the million-dollar frauds in this study were detected by tips. This is more than twice the rate of detection by internal audits and three times the rate of detection by external audits.   Certain anti-fraud controls can have a measurable impact on an organization’s exposure to fraud.   In the cases we reviewed, organizations that had anonymous fraud hotlines suffered a median loss of $100,000, whereas organizations without hotlines had a median loss of $200,000. We found similar reductions in fraud losses for organizations that had internal audit departments, that regularly performed surprise audits, and that conducted anti-fraud training for their employees and managers.   Occupational fraud and abuse imposes enormous costs on organizations.   The median loss caused by the occupational frauds in this   study was $159,000. Nearly one-quarter of the cases caused at least $1 million in losses and nine cases caused losses of $1 billion or more.   Participants in our study estimate U.S. organizations lose 5% of their annual revenues to fraud. Applied to the estimated 2006 United States Gross Domestic Product, this 5% figure would translate to approximately $652 billion in fraud losses. In 2004, participants estimated 6% of revenue was lost to fraud.   This Report includes organizations representing a wide range of industries. The industries with the highest median losses per scheme were wholesale trade ($1 million), construction ($500,000) and manufacturing ($413,000). Government organizations ($82,000) and retail organizations ($80,000) were among those with the lowest median losses.   Small businesses continue to suffer disproportionate fraud losses. The median loss suffered by organizations with fewer than 100 employees was $190,000 per scheme. This was higher than the median loss in even the largest organizations. The most common occupational frauds in small businesses involve employees fraudulently writing company checks, skimming revenues, and processing fraudulent invoices. One reason small businesses suffer such high fraud losses is that they generally do a poor job of proactively detecting fraud. Less than 10% of small businesses had anonymous fraud reporting systems, and less than 20% had internal audit departments, conducted surprise audits, or conducted fraud training for their employees and managers. This helps explain why more small business frauds were detected by accident than by any other means.   The size of the loss caused by occupational fraud is strongly related to the position of the perpetrator. Frauds committed by owners or executives caused a median loss of $1 million. This is nearly five times more than the median loss caused by managers, and almost 13 times as large as the median loss caused by employees.   Most of the occupational fraud schemes in our study involved either the accounting department or upper management. Just over 30% of the occupational frauds were committed by employees in the accounting department, and slightly more than 20% were committed by upper management or executive-level employees. The next most-commonly cited department was sales, which  accounted for 14% of the cases in our study. Nearly two-thirds of the victim organizations in our study routinely conducted background checks on new employees. However, less than 8% of the perpetrators had convictions prior to committing their frauds. Although background checks on new employees can be a valuable anti-fraud tool, our data suggests that other measures such as fraud training, surprise audits and anonymous reporting mechanisms can have a more significant impact in detecting fraud.   To view the complete study:   2006-ACFE Report to the Nation on Occupational Fraud and Abuse.pdf We can work with your appointed legal counsel to assist in determining and assessing the extent of a fraud event or wrongful act to be proven at trial, and if appropriate, provide expert witness testimony at deposition or trial.