Forensic accounting interview techniques

Conducting Effective Interviews

Table of Contents I. Introduction – Interviewing Skills . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Purpose of Interviewing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

B. Interrogation versus an Interview . . . . . . . . . . . . . . . . . . . . . . . . .2

C. Characteristics of an Effective Interview. . . . . . . . . . . . . . . . . . . .2

D. Interviewing Ground Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

II. Preparing for an Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. What to Consider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

B. Who Should be Interviewed. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

C. In Advance of the Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

III. Conducting an Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. Who Should be Present at the Interview . . . . . . . . . . . . . . . . . . .6

B. How to Begin an Interview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

C. Types of Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

D. Question Sequence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

E. Note-Taking during the Interview. . . . . . . . . . . . . . . . . . . . . . . . .9

F. How to Conclude an Interview. . . . . . . . . . . . . . . . . . . . . . . . . . .9

IV. Detecting Deception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

V. Getting an Admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

VI. Documenting an Interview. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

VII. Safety Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. Prior to the Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

B. During the Interview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

VIII. Dos and Don’ts of Interviewing . . . . . . . . . . . . . . . . . . . . . . 16

I. Introduction – Interviewing Skills For Forensic Investigations Forensic accountants frequently are asked to help attorneys, boards of directors, management, regulators, law enforcement and others to determine the facts surrounding complex financial matters. In a forensic investigation, interviews are critical when determining the who, what, when, where, how and why. A successful interview is essential when gathering facts and steering an investigation in the right direction. This white paper will focus on the interview skills necessary to carry out a forensic investigation.

Many forensic investigations involve fraud allegations. By way of background information, it may be helpful for the reader to understand the basic elements of a scheme to defraud. Fraud includes misrepresentations of material fact, knowledge of the falsity of the misrepresentation or ignorance of the truth, intent, a victim acting on the misrepresentation and damage to the victim. It also should be remembered that attempts to defraud can be a basis of criminal charges as well. In other words, schemes do not have to be successful to be charged criminally. Forensic accountants also should be familiar with some of the common motives exhibited by persons engaging in fraudulent activities. These motives, which sometimes become evident during interviews, often relate to pride, envy, gluttony, lust, anger, greed or sloth, sometimes known as the seven original sins. It also is helpful to understand the term of art known as the “fraud triangle,” which refers to the three elements that generally need to be present for someone to be able to commit fraud, i.e. opportunity, pressure and rationalization. To be able to commit fraud, all three of these elements of the fraud triangle should be considered when planning for an interview.

While most fraud investigations and forensic accounting engagements are resolved outside of the litigation

process, it is highly recommended that forensic accountants approach each case from the perspective that the case ultimately will end up in a civil and/or criminal public trial. Inexperienced practitioners should seriously consider the implications of performing this work without such specialized knowledge.

To better prepare an investigation plan, it is wise to keep in mind what a jury will hear at the conclusion of a case. The juries will be allowed to deliberate on evidence admitted by a trial judge along with a set of written instructions from the court that will offer definitions of key concepts. In white-collar crime or financial crime cases, the government always must prove that there was an intent or willfulness to defraud. Jury instructions given by the court will include definitions of a scheme or artifice to defraud as well as a definition of intent to defraud. For example, a scheme or artifice to defraud can be defined as any design, plan, pattern, or course of action, including false and fraudulent pretenses and misrepresentations, intended to deceive others in order to obtain something of value, such as money. To act with “intent to defraud” means to act with intent to cheat or to deceive. Forensic accountants conducting interviews should be familiar with these concepts before conducting interviews. By becoming familiar with the concepts facing jurors, these concepts can be incorporated into the questioning process for witnesses, victims and suspects. Forensic accountants can obtain examples of proposed jury instructions by accessing public websites such as federal appeals court websites. As an example, the website for the United States 10th Circuit Court of Appeals in Denver, CO, can be accessed at ca10.uscourts.gov to view criminal pattern jury instructions.

Knowledge of these concepts becomes even more important when interviewing experienced criminals. Experienced criminals understand the importance of

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http://ca10.uscourts.gov/

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proving intent, so they often may attempt to build in their defenses as the scheme is being advanced. It is not uncommon for experienced criminals to explain their actions in terms of unintentional conduct, accidental behavior or mistakes. Therefore, the results of an effective interview can help establish a pattern of deceit, cheating and possibly lying that may be most useful in proving the intent to defraud issue.

A. Purpose of Interviewing An interview can best be described as a professional conversation conducted with a specific purpose or goal in mind. The thrust of an effective interview is to gain knowledge and information that is pertinent to the inquiries.

The primary purpose of most interviews is to gather evidence through facts and other information supplied by witnesses. Interviewing is performed throughout an investigation. With each successive interview, the interviewers should obtain background information about the witnesses, the subject matter of the investigation, and the potential suspects. Efforts should be made during the interviews to identify new records and additional witnesses. A variety of interview methods will be discussed; however, regardless of the methods used, interviews generally should strive to answer basic questions: who, what, where, when, how and why.

B. Interrogation versus an Interview An interrogation generally is viewed as a process of questioning with force, moving toward a denial of the incident or a confession. In many occasions, a simple fact-gathering interview may evolve into an interrogation with the unsuspected perpetrator of the alleged illicit activity. Forensic accountants may find themselves in this type of position and always should consider this possibility. On other occasions, forensic accountants may be a part of an investigation where confrontational interviews are likely. The dividing line between interviews and interrogations is not always clear-cut.

Interviewers should be prepared for a wide variety of circumstances in a forensic engagement and should remain objective, fair and act with integrity.

Accountants, whether performing attest or forensic consulting services, normally do not interrogate individuals in order to obtain admissions of guilt. However, sometimes forensic accountants may be present during an interrogation if retained by counsel to assist in a criminal investigation. It is advisable that once an allegation of illegal behavior is made, practitioners should consult with their client’s legal counsel. Practitioners who are not experienced in forensic investigation and who do not consult with counsel before undertaking an investigation expose themselves to potential ethical violations and/or serious legal consequences.

Lastly, forensic specialists are fact-finders who may appear to lose their objectivity if they assume the role of interrogator seeking a confession. Although a confession may be elicited based on the evidence produced by the forensic accountant, interrogation normally is reserved for experienced specialists such as polygraph examiners or law enforcement officers.

C. Characteristics of an Effective Interview To be successful, an interview should be thorough. It requires strategic planning, relevant questions and an objective interviewer. Many interviews fail to gather enough information to address the issues raised in a forensic matter because of inadequate preparation, or because insufficient time is allowed to complete the interview. If an interview is scheduled in advance, as many are, there is a natural tendency to schedule a set time for the initiation and completion. If possible, sufficient time should be allowed to conduct the interview with the time of completion left open. If a set time is established, the person interviewed may be overly focused on the ending time, thereby inhibiting a flow of information. Interviewers can enhance

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their credibility by focusing on information that the interviewee should know, as opposed to guessing during the interview and thereby wasting the time of the participants by asking questions that the interviewee could not know. By remaining objective and fair, the interviewers can better gain the confidence of the interviewee. Ideally, the interview should be conducted as soon as the alleged impropriety has been discovered.

An effective interviewer should be an active listener, as well as an active observer. Both are learned skills that can be studied and improved with practice. Active listening means not only listening more than talking, but really hearing what is being said and how it is being communicated. Sometimes what is not being said is equally as important as what has been said by the interviewee.

D. Interviewing Ground Rules Interviewers can develop rapport by exhibiting objectivity, fairness and professionalism at all times. Courtesy and respect toward the person being interviewed will help create a comfortable interview setting. The interviewers should be non-threatening in their demeanor, particularly in the introductory phase. If documents or exhibits are to be used, these documents should be carefully arranged before the interview. Generally speaking, it is preferable to use copies of documents as opposed to original documents. It always is recommended that only one person should be interviewed at a time. When arranging an interview, a location should be chosen to ensure privacy and to minimize interruptions. The use of cell phones should be discouraged. Care should be taken to ensure that the person being interviewed has access to an exit that is not blocked by the interviewers. This is a safety consideration, but also may be a consideration to demonstrate the voluntary nature of statements. The interviewer always should try to clarify and verify the information gained during the interview. To prepare for the interview, interviewers should thoroughly review the appropriate data, documents, and information relating to the subject matter of the interview.

II. Preparing for an Interview

A. What to Consider Depending on the situation, there are many factors that need to be considered before undertaking an investigation. Coordination with someone from Human Resources, Security and the Information Technology departments typically is undertaken before the interview process. One of the most important considerations is when to involve legal counsel. In situations such as when a parent company would like a second pair of eyes on a subsidiary, but no specific allegation has been made, involving counsel may not appear to be necessary. However, if a specific allegation has been made and there is a question of whether a law has been broken or if criminal behavior is suspected, it is appropriate to involve counsel from the beginning.

1 When to Involve Counsel

Forensic accountants should resist the temptation to initiate interviews without considering the significant legal implications that may arise. While most interviews will be straight-forward fact-finding situations where persons are asked basic questions, many interviews may involve important legal considerations that should involve consultation and guidance from counsel. Working under the direction of counsel protects the forensic accountants from overreaching or unwittingly crossing the line. For example, interviews may be protected by legal privilege if the forensic accountant has been retained by counsel. Privileged conversations are kept confidential and may be protected from further inquiry or disclosure. Without this protection, forensic accountants may be forced to disclose inaccurate or slanderous information that may wrongly harm an individual (or individuals), thereby exposing the forensic accountant to negative legal ramifications. Complicated legal issues may also arise if there is an “expectation of privacy,” for which there is no bright-line test to help the forensic accountant determine whether such expectation has been breached. It cannot be stressed enough that it always is better to work under the direction of counsel when it is anticipated that sensitive issues such as these may arise. Furthermore, after interviews conclude, it may be advisable to speak with counsel to determine what

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should happen with the original interview notes. Each situation presents a different set of circumstances. And each situation presents complicated legal issues that forensic accountants, by themselves, are not equipped to handle without legal guidance.

2 Securing Data, Documents and Information

The initial steps taken upon the initial discovery of suspected fraud are critical and should be taken with thoughtful consideration. Forensic accountants may wish to advise their clients to secure data, documents, and information before initiating the interview process. Once people learn that an investigation may be under way, any delay in securing electronic and documentary evidence may result in the alteration, destruction or deletion of documents or computer data. Gathering this evidence requires that proper chain of custody procedures be followed to insure the integrity of the evidence, especially if such evidence is to be eventually relied upon in a legal proceeding. This underscores the importance of developing thorough investigative plans at the initiation of a case, as well as the importance of consultation with counsel to identify and address legal issues that may arise.

3 Types of Evidence

Fraud and forensic investigations normally will involve collection of evidence, a review of previous statements and further interviews. Depending on the allegations, some of the types of evidence that may be useful for interviewing purposes may include, but certainly are not limited to, whistleblower complaints, emails, books and records of the business,1 office contents, as well as information gleaned from the performance of relevant background research.

Another type of evidence that may be useful to the forensic accountant, and that never should be overlooked, is the existence of previous statements made by persons. However, sometimes previous statements may be unobtainable. For example, it is possible that previous statements made based on assurances of privilege or whistleblower protections may

be restricted. If previous statements were obtained after promises or threats concerning continued employment, such statements may be problematic. Questions concerning the previous collection of statements and evidence should be considered with counsel while planning the investigation.

4 Spoliation

Spoliation of evidence is the intentional or negligent withholding, hiding, alteration or destruction of evidence relevant to a legal proceeding (Black’s Law Dictionary). Forensic accountants always should consider the possibility that their investigative procedures will appear in a legal proceeding in the future. For evidence to be admitted, the trier of fact will have to be convinced that statements were made voluntarily, that evidence was lawfully gathered, and that the evidence has not been altered. In addition, material evidence cannot be intentionally concealed, withheld or destroyed. Severe civil and criminal consequences may result. If a practitioner is unfamiliar with acceptable forensic practices, then something as simple as turning on a computer without the use of forensic imaging technology may result in the spoliation of evidence.