understand financial reporting. The severity of the risk would depend on the specific facts and circumstances present. Could you share an example from your past experience where you successfully identified and addressed an accounting issue raised through a whistleblower allegation? In one case, a whistleblower who was working in the warehouse and logistics area, was concerned about slow-moving inventory, and pointed out that there were large quantities of materials lying around for extended periods of time with no apparent sales activity. Our work determined that an appropriate reserve for obsolete and slow-moving inventory had been established by the accounting team. It just wasn’t visible to the whistleblower and was not an issue. In another case, an anonymous whistleblower alleged that the profits and cash were overstated at a small European subsidiary of a public registrant. This subsidiary had historically not been subjected to a full internal or external audit due to its immaterial nature. When we started to investigate, it became clear early on that there were numerous unsupported entries recorded by the controller locally, prior to the results being included in the consolidation process. This activity had taken place over several years and was ultimately material to the overall entity and a restatement was required. In addition, the controller had obtained and manipulated an electronic copy of a bank confirmation to fraudulently support the overstated cash balance. What role does technology play in your investigative process, and how do you leverage it effectively? Over the years, technology has continued to play an ever-increasing role in the investigative and forensic accounting process. Thirty years ago, I remember doing investigations where the team would routinely print out most of a custodian’s emails and read them for relevance. Thankfully, we have made significant progress since then. At the same time, the volume of data has exploded, and you cannot investigate without using a variety of analytical tools and technology to increase efficiency and help reduce or eliminate nonrelevant information. We review emails and other electronic communications (internal messaging software, other messaging applications – if available) in our investigative work. We work with counsel to generate a list of search terms that are responsive to the whistleblower allegations and help review the resulting documents to inform our work. For this process to be efficient, you need to be very thoughtful with the search terms and go through an iterative process to ensure you are not generating too many false positives. I have seen clients leverage various technologically assisted review tools and in general, these are very helpful and increase the efficiency of the process. My experience, especially internationally, is that many people will use nonbusiness platforms to communicate in the ordinary course (e.g., WhatsApp in Latin America, WeChat in China) as well as other encrypted or ephemeral messaging apps. These communications are often not available to review due to privacy rules or inability to access. I find that email review is generally still very helpful to the investigative process, but you need to keep in mind that if people don’t want their communications read by others, they have various options outside of the company systems. There are also some useful tools that allow you to search unstructured data that may reside within the structured financial records. Many general ledger systems include the ability to comment on specific transactions. This can be manual journal entries or other transactions. These types of notes are often helpful when investigating the provenance of accounting entries, as the company staff tasked with the entry input may want to remember the item and include a comment to help identify it as an unusual entry. As the investigative field has grown over the years, there are also some tools created for the forensic practitioner. These can be helpful and include powerful financial analytics tools, modeling and predictive tools, data visualization, blockchain analysis and other items. I have also seen some matters where it is helpful to scrape social media to see what commentary is made by relevant individuals and to consider that in our analysis. To date, I have not personally leveraged any generative AI tools in the investigative process. I believe there are various tools in development so we will see what the future holds in that regard. EXPERT INSIGHT 33 Over the years, technology has continued to play an ever-increasing role in the investigative and forensic accounting process.
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