Uncovering the Detectives of the Financial World

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Uncovering fraud is no easy feat. In the world of forensic accounting, accidental discoveries are a rarity. Every step taken is as calculated as the last — an intentional attempt to trace a crime scene to its roots. In this article, Prakash Chetwani, the Head of the Forensics Division at Alliance IFA, brings us along with him on a journey to recount the most interesting fraud case he played a role in resolving. Besides that, he also imparts valuable insights on various industry changes due to technological advancements and outlines the steps to become a forensic accountant.

Life as a Certified Fraud Examiner (CFE)

With a background in Chartered Accountancy, Prakash moved from India to Malaysia to work with a forensic accounting firm in 2014. Like many others, he believed his role would be largely similar to an auditor’s. To his surprise, he quickly discovered the stark differences in his new job scope and had to acclimatise to the new working environment. 

“The forensic accountant’s role is to bring the reality closer to those who perceive it.”

Prakash prefaces by assuring us that forensic investigations are not rocket science, but are simply about “collaborating and confirming facts”. Essentially, forensic accountants have to collect evidence and piece facts together in order to paint a clearer picture of how the fraud occurred in front of the court. They act as an independent third-party expert throughout the trial — meaning they cannot harbour bias towards their client. Oftentimes, they are asked to testify in court where they have to prove the accuracy of the evidence gathered so the case can proceed.

“In this field, no two investigations are the same,” Prakash remarks. He explains that what a case looks like depends on a variety of factors such as the industry and the type of fraud. Any analysis done must be holistic and based on the unique business or manufacturing processes of each individual organisation. 

Prakash is in charge of taking project ownership and handling projects. On a day-to-day basis, he takes updates from the team, reports to his director and acts as a point of contact for clients to discuss progress updates until the investigation is finalised. After that, mock trials are held for the forensic accountants to practice answering questions from lawyers trying to cross-examine them. The director is usually the person who is in charge of answering the questions posed in court/legal proceedings based on their wealth of expertise and experience.

Forensic Accounting in Action

Prakash recounts the most interesting case he has investigated with enthusiasm —  a stock theft case where fraudsters siphoned oil from a palm oil plantation company. 

“We had to identify the root cause of  how it occurred, what was the mechanism it [the fraud] went through and how they siphoned the oil from the factory.” 

To help us understand how the fraud occurred, Prakash briefly outlines the standard operating procedures (SOPs) of the firm; all lorries coming into the factory go through a weighbridge at a checkpoint and are automatically issued tickets with their corresponding weights. After being filled with oil in the factory, they are reweighed at the same checkpoint to find the total oil dispatched by the firm, which is the difference between the two values. 

While reviewing the automated weighbridge tickets issued by the weighbridge system, the forensic team discovered that some of the lorries were issued manual tickets. During further analysis, they noted that these lorries bypassed the gate while exiting the factory to avoid the weighbridge by colluding with the operator at the terminal. Instead of getting the machine-issued ticket, they fabricated excuses about system failures and ticket generating issues so they could produce their own ticket with faux weights.

Prakash places great emphasis on the importance of having a “skeptical mindset” when investigating, asserting, “Whenever certain facts are being presented to you, you don’t believe it; you don’t accept it. You go back and check the facts and verify if they are true.” He goes on to explain that they checked the logs of the weighbridge to see if the date and time of its breakdown tallied with issuance of manual weighbridge tickets. This was a simple way they used evidence to verify their claims. 

Other methods, such as Electronic Stored Information (ESI) review, information gathering and admission seeking interviews also play an important role in furthering the investigation. Using a combination of different sources of evidence allowed the team to successfully corroborate most of the facts and form a better understanding of the scheme’s flow. “That’s the most beautiful part of forensic investigations,” Prakash adds with fervour.

“[The] Second part [of the assignment] was to quantify the damages.”

Prakash cites damage quantification, the measurement of the value of monetary loss that occurred due to the fraud, as the most complex part of assignments. This is due to the fact that forensic accountants must identify and take into account every conceivable parameter involved in the calculation. Being thorough throughout this process is essential for credibility in the courtroom — failure to do so can result in the reliability of the entire report being questioned.

While carrying out this part of the investigation, Prakash stresses, “Though you are appointed by the client, you should not have any biases towards them”. The team discovered that bottles of oil sent out from the factory were being overfilled, leading to a variance in the stock figures due to more oil being sent out than recorded. These, along with a few other factors they uncovered actually reduced the figure of losses incurred due to fraud. Prakash explains that it was difficult to help the client understand why his team was presenting evidence not favourable towards them, but reinstated that the most important part of the investigation is being independent. After all, a forensic accountant’s goal is ultimately to “present the facts the way they are”.

Tech & The Industry’s Evolution Overtime

Since joining the industry more than seven years ago, Prakash notes that the field has evolved in line with the rapid advancement of technology. New types of fraud such as cyber fraud, identity theft and social engineering, are forever-changing and require different kinds of mechanisms for their identification and elimination. As such, forensic accountants now have to work hand-in-hand with the computer forensic division in order to obtain electronic documents. 

“When we do the primary review, we identify a few persons who may be involved… We will ask the company to secure their electronic devices… Once they do that, we’ll try to do the imaging. That is part of the computer forensic analysis that we do.”

Prakash highlights that correspondence between suspects and third parties are often powerful pieces of evidence which are used to support propositions in court. Apart from coming in the form of email trails, they have also started showing up in messaging applications such as Whatsapp, in recent years. Prakash’s team, which used to only search for data in company-owned laptops, now examine the media in their company phones as well. New technology has also been introduced to automate the process of narrowing searches to quicken the filtering process involving thousands of emails. Prakash is quick to emphasise that “Human touch is [still] essential,”. Systems simply lack the ability to interpret information in the same manner professionals do.

The pandemic has also brought to light the prevalence of cybercrime. With thousands of physical documents being digitised due to teleworking, many firms have discovered evidence of fraud through gaps in their document collection. While organisations are trying to attune to more secure technologies such as blockchain, Prakash believes that we are still in the early stages and that it will be a few years more before blockchain technology becomes prevalent in this field.

Prakash separates cases into two categories: proactive and reactive. In layman’s terms, proactive investigations are when forensic accountants are hired to prevent fraud before its occurrence, while reactive investigations deal with cases where fraud has already occurred. He notes that he has seen an increase in the proportion of proactive cases over the years as firms are becoming increasingly aware of the dangers of fraud. Many firms are now revisiting their SOPs and framing Anti-Bribery and Corruption policies (ABAC) to strengthen their internal control system. Whistleblower platforms, for example, are implemented to give employees a safe space to voice their concerns about suspicious behaviour to the management.

Career Pathways for the Youth

Prakash states that candidates pursuing a career in forensic accounting should possess a finance or auditing background. While most minimum requirements include a bachelor’s degree in accounting or finance, it is strongly recommended for applicants to complete a Master’s or equivalent qualification such as ACCA or CA after their first degree. Prakash believes that following this pathway provides people with a solid foundation in understanding the methods used to conduct ledger scrutiny as well as analysis of financial records and audited financial reports —  a vital skill needed to excel in the industry.

For those wanting to specialise, Prakash cites the CFE (Certified Fraud Examiner) certification as the most important one to get acquainted with. He notes that the CFE is specially tailored for forensic assignments as it provides students with an abundance of relevant knowledge and practical training to prepare them for working in the field.

“As far as forensic is concerned, I would say it’s more of an experience of doing things how you do.”

Nevertheless, due to the dynamic nature of the job, Prakash stresses that one’s experience plays a far more significant role than the number of qualifications amassed. In particular, soft skill sets such as communication skills are essential as they are utilised in most aspects of the job, for instance, in meetings and written reports. Adding on, Prakash also cites strong analytical skills and attention to detail as being crucial to the art of writing reports and examining documents.

“If I were to go back [in time], I’d try to develop my soft skills and be interactive with those influencers or people who are already having a successful journey…”

Prakash earnestly advises youths to take full advantage of the technology to connect with professionals in their field of interest in order to learn more about their subject area. He further encourages readers to learn more about the world of forensic accounting by reading journals published by the ACFE, specifically the annual global study report titled: “Report to the Nations”. He generously welcomes any hopefuls to contact him for more perspective.

If you would like to reach out to Prakash for further insights, you can contact him here: https://www.linkedin.com/in/prakash-chetwani-36744657


Journalist: Emeline Yong

Reviewers: Hurriya Irfan, Jessie Gan

Editor: Natalie Seah

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