forensic accounting:tools for financial exploitation
TRANSCRIPT
Forensic Accounting:Tools for Financial Exploitation
InvestigationsOctober 26, 2021
Jason Olson, MBA, CPA/CFF, CFE, CFI, Eide Bailly, LLP Douglas Cash, MBA, CFE, CFI, Eide Bailly, LLP
Disclaimer The National Adult Maltreatment Reporting System (NAMRS) and the Adult Protective Services Technical Assistance Resource Center (APS TARC) are a project of the U.S. Administration for Community Living, Administration on Aging, Department of Health and Human Services, administered by the WRMA, Inc. Contractor’s findings, conclusions, and points of view do not necessarily represent U.S. Administration for Community Living, Administration on Aging, Department of Health and Human Services official policy.
Adult Protective Services Technical Assistance Resource Center 2
About the APS TARC The mission of the APS TARC is to enhance the effectiveness of state APS programs by:
Supporting federal, state, and local partners’ use of data and analytics,
Applying research and evaluation to practice, and
Encouraging the use of innovative practices and strategies.
Adult Protective Services Technical Assistance Resource Center 3
Peer to Peer Calls
Adult Protective Services Technical Assistance Resource Center 4
Have you ever wished that you could tap into the expertise of other APS workers, supervisors or state administrators who are struggling with the same issues and concerns that you deal with daily? The APS TARC provides Peer to Peer calls for workers, supervisors and managers/state administrators.
Workers’ Call: The 2nd Wednesday of each month
Supervisors’ Call: The 3rd Wednesday of each month
Administrators’/Managers’ Call: The 4th Wednesday of each month
Register via the link sent out at the end of each month by the APS TARC or email us in order to receive the registration link!
Housekeeping • Handouts/Slides are available for download in the
"Handouts" section of your webinar control panel. You may download them at any time.
• Please use your computer speakers to access audio for this webinar. Please make sure the speaker volume is adjusted to your desired volume.
• If you experience audio problems due to internet connection speeds or hardware issues, we recommend exiting the webinar and re-entering.
Adult Protective Services Technical Assistance Resource Center 5
Housekeeping • You may ask questions of our presenter at any time by
typing them in the "Questions" box. We will relay as many as we can to the speaker when we pause for questions.
• This webinar is being recorded and all registrants will receive an email when the recording is made available on the APS TARC website.
• All attendees will receive an automatically generated email approximately 24 hours after the webinar ends with a link to a certificate of attendance.
Adult Protective Services Technical Assistance Resource Center 6
FORENSIC ACCOUNTING Tools for Financial Exploitation Investigations
PRESENTERS
Jason Olson, MBA, CPA/CFF, CFE, CFI Partner, Fraud & Forensic Advisory
Services Eide Bailly, LLP [email protected]
612.253.6554
Douglas Cash, MBA, CFE, CFI Sr. Manager, Fraud & Forensic Advisory
Services Eide Bailly LLP
Eide Bailly LLP
• Top 25 CPA firm in the nation (Est. 1917) • 350+ partners, 2,500+ professionals, 40+ offices in
14 states
PRESENTATION DISCLAIMER
These seminar materials are intended to provide the seminar participants with guidance in financial exploitation investigation matters. The materials do not constitute, and should not be treated as professional advice regarding the use of any particular forensic technique or related consequences associated with any forensic technique.
Every effort has been made to assure the accuracy of these materials. Eide Bailly LLP and the author do not assume responsibility for any individual's reliance upon the written or oral information provided during the seminar.
Seminar participants should independently verify all statements made before applying them to a particular fact situation, and should independently determine the consequences of any particular forensic technique before recommending the technique to a client or implementing it on the client's behalf.
AGENDA
• Background
• Case Examples
Using your “questions” box, let us know:
• What is the number one thing you want to learn from this session?
POLLING QUESTION NO. 2
Using your “questions” box, let us know:
• What do you believe is your biggest hurdle when performing a financial exploitation investigation?
POLLING QUESTION NO. 3
Have you ever engaged a forensic accountant to assist you with a financial exploitation investigation?
A. Yes B. No
DEFINITION OF FORENSIC ACCOUNTING
An attempt to piece together or reconstruct a past event or events using financial information where that reconstruction is likely to be used in some judicial proceeding.
FORENSIC ACCOUNTANTS & EXPLOITATION INVESTIGATIONS
• What types of cases do we handle? • Fraud detection and investigation • Financial exploitation • Litigation support • Economic damage calculations
• What types of agencies have we assisted? • Sheriff’s Offices • Prosecutors/County Attorneys • Adult Protection Services • Local Law Enforcement
FORENSIC ACCOUNTANTS & EXPLOITATION INVESTIGATIONS
• How does one go about hiring forensic accountants? • Contact us
• We will let you know what information we need, get an engagement letter put together and request the records we need
• Yearly contracts with states, counties, and others are case-by-case
WHAT FORENSIC ACCOUNTANTS NEED FROM YOU?
• Access to medical and financial records
• Interpretation of medical records • Timeline of cognitive impairment (if any)
WE NEED TO BE THINKING ABOUT…
• Compentency
• Capacity
• Consent
CAPACITY, CONSENT AND UNDUE INFLUENCE ISSUES
• If victim had capacity, was consent obtained by undue influence?
• If victim’s capacity is impaired, to what degree was it impaired at the time of the taking or giving of consent?
• Your prosecutor should be able to help you with getting to the bottom of these questions.
AUTHORITY?
• Guardianship
• Conservatorship
• Depending upon state laws and case facts, you may need to look at charges of larceny, theft, embezzlement, elder financial abuse, forgery, financial exploitation or fraud.
REMEMBER…
• May need to rely on the totality of circumstances
INVESTIGATION PROCESS
Document Findings
IDENTIFYING ASSETS
• Identify all assets of the vulnerable adult • Gathering of the evidence
• How do you identify the assets?
• Real estate • County tax records, closing documents, property
deeds etc. • Financial accounts
IDENTIFYING ASSETS
• HR documentation • Items at home
• Cash, collectibles, jewelry, vehicles, etc. • Search of computer
• .csv, .qbb, .qdf, .qif, .xls, .xlsx., etc.
IDENTIFYING ASSETS
• Determine what documents the vulnerable adult signed to place assets in someone else’s control • POA, signature cards
• Wills and trusts
• Interview vulnerable adult, witnesses and perpetrator if possible • Preservation of testimony (audio/video tape)
OBTAINING RECORDS
• Obtain electronically if possible • Save statements as .PDF file to computer from online banking, etc. • Download electronic transactions to database if possible (i.e. bank transactions to
Excel)
• Organize and Inventory by: • Account • Date order - oldest to newest
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - CREDIT REPORTS
• Bank/investment account records • Statements • Cancelled checks • Deposit tickets/deposited items
• What do you look for? • Patterns of unusual spending for vulnerable adult • Signatures and forged signatures • Purchases that do not make sense • Checks to cash (endorsements on back of checks) • Compare and contrast (spending before/after allegation) • Unknown accounts • Withdrawals/ATM withdrawals
EXAMINING FINANCIAL RECORDS
• Loan documentation • Detailed loan statements documenting loan disbursements and payments • Source documentation related to loan disbursements
• Maybe advanced into a related checking account or disbursed through a cashier’s check(s)
• What to look for? • What was the purpose of the loan(s)? • Were the loan proceeds used as intended? • How were payments being made and by whom?
EXAMINING FINANCIAL RECORDS
• Credit Cards • Statements • Supporting receipts (if available)
• What to look for? • Patterns of unusual spending for vulnerable adult • Purchases that do not make sense for the vulnerable adult • Cash advances or ATM/cash withdrawals • Compare and contrast (spending before/after allegation)
EXAMINING FINANCIAL RECORDS
• Compare and contrast between spending from the perpetrator’s financial accounts versus vulnerable adult’s accounts to which the perpetrator has access to
• I.e. - No gas/grocery purchases from perpetrator’s accounts, however numerous gas/grocery purchases from vulnerable adult’s accounts
DOCUMENTING FINDINGS
• Use of Microsoft Excel (or similar) to quantify type, frequency and dollar amount of fraudulent transactions
• Consider using tables and graphs to depict fraudulent transactions • Visual objects are worth a thousand words • Seek out online training in Excel/with pivot tables
DOCUMENTING FINDINGS
• Narrative/report of the case and the facts identified (who, what, when, where, why and how) • Include charts and/or graphs when possible to summarize the financial data
• Workpapers reflecting the suspect financial transactions
• Copies of the actual financial documents to substantiate the work papers
DOCUMENTING FINDINGS
• It is important to have as much information clearly documented and substantiated as possible • Victim testimony may not be reliable or possible
• Age • Health • Mental capacity • Death
• Victim may be unwilling to testify • Embarrassment • Fear of being perceived as unable to care for themselves
Investigation Process – “Old Method”
INVESTIGATION PROCESS – “NEW METHOD”
FORENSIC ACCOUNTING PROVIDES CLARITY
SUMMARY OF OUR PROCESS
Initial Meeting and Discussion
Examination Procedures
Questions
Testify (If Necessary)
Report – Narrative outlining the documents we examined, our procedures and our findings
Workpapers – Detail our findings
WHERE TO BEGIN?
This Photo by Unknown Author is licensed under CC BY-NC-ND
NO SMOKING GUN…NO PROBLEM
CASE EXAMPLE
CASE EXAMPLE
$0.00 $5,000.00
2009 2010 2011 2012 2013
Not Suspect
• Start “following the money” – obtain documentation and examine the transactions
• Summarize your investigation by preparing a report with supporting workpapers and original source documents
• Forensic accountants can assist you!
THANK YOU
Jason Olson, MBA, CPA/CFF, CFE, CFI Partner, Fraud and Forensic Advisory Services [email protected] 612.253.6554
Doug Cash, MBA, CFE, CFI, CFCI Senior Manager, Fraud and Forensic Advisory Services [email protected] 303.586.8504
Questions?
Contact & Follow Us https://apstarc.acl.gov/ [email protected]
Adult Protective Services Technical Assistance Resource Center 56
Authority?
Remember…
Case Example
Case Example
Case Example
Authority?
Remember…
Case Example
Case Example
Case Example
Jason Olson, MBA, CPA/CFF, CFE, CFI, Eide Bailly, LLP Douglas Cash, MBA, CFE, CFI, Eide Bailly, LLP
Disclaimer The National Adult Maltreatment Reporting System (NAMRS) and the Adult Protective Services Technical Assistance Resource Center (APS TARC) are a project of the U.S. Administration for Community Living, Administration on Aging, Department of Health and Human Services, administered by the WRMA, Inc. Contractor’s findings, conclusions, and points of view do not necessarily represent U.S. Administration for Community Living, Administration on Aging, Department of Health and Human Services official policy.
Adult Protective Services Technical Assistance Resource Center 2
About the APS TARC The mission of the APS TARC is to enhance the effectiveness of state APS programs by:
Supporting federal, state, and local partners’ use of data and analytics,
Applying research and evaluation to practice, and
Encouraging the use of innovative practices and strategies.
Adult Protective Services Technical Assistance Resource Center 3
Peer to Peer Calls
Adult Protective Services Technical Assistance Resource Center 4
Have you ever wished that you could tap into the expertise of other APS workers, supervisors or state administrators who are struggling with the same issues and concerns that you deal with daily? The APS TARC provides Peer to Peer calls for workers, supervisors and managers/state administrators.
Workers’ Call: The 2nd Wednesday of each month
Supervisors’ Call: The 3rd Wednesday of each month
Administrators’/Managers’ Call: The 4th Wednesday of each month
Register via the link sent out at the end of each month by the APS TARC or email us in order to receive the registration link!
Housekeeping • Handouts/Slides are available for download in the
"Handouts" section of your webinar control panel. You may download them at any time.
• Please use your computer speakers to access audio for this webinar. Please make sure the speaker volume is adjusted to your desired volume.
• If you experience audio problems due to internet connection speeds or hardware issues, we recommend exiting the webinar and re-entering.
Adult Protective Services Technical Assistance Resource Center 5
Housekeeping • You may ask questions of our presenter at any time by
typing them in the "Questions" box. We will relay as many as we can to the speaker when we pause for questions.
• This webinar is being recorded and all registrants will receive an email when the recording is made available on the APS TARC website.
• All attendees will receive an automatically generated email approximately 24 hours after the webinar ends with a link to a certificate of attendance.
Adult Protective Services Technical Assistance Resource Center 6
FORENSIC ACCOUNTING Tools for Financial Exploitation Investigations
PRESENTERS
Jason Olson, MBA, CPA/CFF, CFE, CFI Partner, Fraud & Forensic Advisory
Services Eide Bailly, LLP [email protected]
612.253.6554
Douglas Cash, MBA, CFE, CFI Sr. Manager, Fraud & Forensic Advisory
Services Eide Bailly LLP
Eide Bailly LLP
• Top 25 CPA firm in the nation (Est. 1917) • 350+ partners, 2,500+ professionals, 40+ offices in
14 states
PRESENTATION DISCLAIMER
These seminar materials are intended to provide the seminar participants with guidance in financial exploitation investigation matters. The materials do not constitute, and should not be treated as professional advice regarding the use of any particular forensic technique or related consequences associated with any forensic technique.
Every effort has been made to assure the accuracy of these materials. Eide Bailly LLP and the author do not assume responsibility for any individual's reliance upon the written or oral information provided during the seminar.
Seminar participants should independently verify all statements made before applying them to a particular fact situation, and should independently determine the consequences of any particular forensic technique before recommending the technique to a client or implementing it on the client's behalf.
AGENDA
• Background
• Case Examples
Using your “questions” box, let us know:
• What is the number one thing you want to learn from this session?
POLLING QUESTION NO. 2
Using your “questions” box, let us know:
• What do you believe is your biggest hurdle when performing a financial exploitation investigation?
POLLING QUESTION NO. 3
Have you ever engaged a forensic accountant to assist you with a financial exploitation investigation?
A. Yes B. No
DEFINITION OF FORENSIC ACCOUNTING
An attempt to piece together or reconstruct a past event or events using financial information where that reconstruction is likely to be used in some judicial proceeding.
FORENSIC ACCOUNTANTS & EXPLOITATION INVESTIGATIONS
• What types of cases do we handle? • Fraud detection and investigation • Financial exploitation • Litigation support • Economic damage calculations
• What types of agencies have we assisted? • Sheriff’s Offices • Prosecutors/County Attorneys • Adult Protection Services • Local Law Enforcement
FORENSIC ACCOUNTANTS & EXPLOITATION INVESTIGATIONS
• How does one go about hiring forensic accountants? • Contact us
• We will let you know what information we need, get an engagement letter put together and request the records we need
• Yearly contracts with states, counties, and others are case-by-case
WHAT FORENSIC ACCOUNTANTS NEED FROM YOU?
• Access to medical and financial records
• Interpretation of medical records • Timeline of cognitive impairment (if any)
WE NEED TO BE THINKING ABOUT…
• Compentency
• Capacity
• Consent
CAPACITY, CONSENT AND UNDUE INFLUENCE ISSUES
• If victim had capacity, was consent obtained by undue influence?
• If victim’s capacity is impaired, to what degree was it impaired at the time of the taking or giving of consent?
• Your prosecutor should be able to help you with getting to the bottom of these questions.
AUTHORITY?
• Guardianship
• Conservatorship
• Depending upon state laws and case facts, you may need to look at charges of larceny, theft, embezzlement, elder financial abuse, forgery, financial exploitation or fraud.
REMEMBER…
• May need to rely on the totality of circumstances
INVESTIGATION PROCESS
Document Findings
IDENTIFYING ASSETS
• Identify all assets of the vulnerable adult • Gathering of the evidence
• How do you identify the assets?
• Real estate • County tax records, closing documents, property
deeds etc. • Financial accounts
IDENTIFYING ASSETS
• HR documentation • Items at home
• Cash, collectibles, jewelry, vehicles, etc. • Search of computer
• .csv, .qbb, .qdf, .qif, .xls, .xlsx., etc.
IDENTIFYING ASSETS
• Determine what documents the vulnerable adult signed to place assets in someone else’s control • POA, signature cards
• Wills and trusts
• Interview vulnerable adult, witnesses and perpetrator if possible • Preservation of testimony (audio/video tape)
OBTAINING RECORDS
• Obtain electronically if possible • Save statements as .PDF file to computer from online banking, etc. • Download electronic transactions to database if possible (i.e. bank transactions to
Excel)
• Organize and Inventory by: • Account • Date order - oldest to newest
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - BANK ACCOUNTS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - TAX RETURNS
OBTAINING RECORDS - CREDIT REPORTS
• Bank/investment account records • Statements • Cancelled checks • Deposit tickets/deposited items
• What do you look for? • Patterns of unusual spending for vulnerable adult • Signatures and forged signatures • Purchases that do not make sense • Checks to cash (endorsements on back of checks) • Compare and contrast (spending before/after allegation) • Unknown accounts • Withdrawals/ATM withdrawals
EXAMINING FINANCIAL RECORDS
• Loan documentation • Detailed loan statements documenting loan disbursements and payments • Source documentation related to loan disbursements
• Maybe advanced into a related checking account or disbursed through a cashier’s check(s)
• What to look for? • What was the purpose of the loan(s)? • Were the loan proceeds used as intended? • How were payments being made and by whom?
EXAMINING FINANCIAL RECORDS
• Credit Cards • Statements • Supporting receipts (if available)
• What to look for? • Patterns of unusual spending for vulnerable adult • Purchases that do not make sense for the vulnerable adult • Cash advances or ATM/cash withdrawals • Compare and contrast (spending before/after allegation)
EXAMINING FINANCIAL RECORDS
• Compare and contrast between spending from the perpetrator’s financial accounts versus vulnerable adult’s accounts to which the perpetrator has access to
• I.e. - No gas/grocery purchases from perpetrator’s accounts, however numerous gas/grocery purchases from vulnerable adult’s accounts
DOCUMENTING FINDINGS
• Use of Microsoft Excel (or similar) to quantify type, frequency and dollar amount of fraudulent transactions
• Consider using tables and graphs to depict fraudulent transactions • Visual objects are worth a thousand words • Seek out online training in Excel/with pivot tables
DOCUMENTING FINDINGS
• Narrative/report of the case and the facts identified (who, what, when, where, why and how) • Include charts and/or graphs when possible to summarize the financial data
• Workpapers reflecting the suspect financial transactions
• Copies of the actual financial documents to substantiate the work papers
DOCUMENTING FINDINGS
• It is important to have as much information clearly documented and substantiated as possible • Victim testimony may not be reliable or possible
• Age • Health • Mental capacity • Death
• Victim may be unwilling to testify • Embarrassment • Fear of being perceived as unable to care for themselves
Investigation Process – “Old Method”
INVESTIGATION PROCESS – “NEW METHOD”
FORENSIC ACCOUNTING PROVIDES CLARITY
SUMMARY OF OUR PROCESS
Initial Meeting and Discussion
Examination Procedures
Questions
Testify (If Necessary)
Report – Narrative outlining the documents we examined, our procedures and our findings
Workpapers – Detail our findings
WHERE TO BEGIN?
This Photo by Unknown Author is licensed under CC BY-NC-ND
NO SMOKING GUN…NO PROBLEM
CASE EXAMPLE
CASE EXAMPLE
$0.00 $5,000.00
2009 2010 2011 2012 2013
Not Suspect
• Start “following the money” – obtain documentation and examine the transactions
• Summarize your investigation by preparing a report with supporting workpapers and original source documents
• Forensic accountants can assist you!
THANK YOU
Jason Olson, MBA, CPA/CFF, CFE, CFI Partner, Fraud and Forensic Advisory Services [email protected] 612.253.6554
Doug Cash, MBA, CFE, CFI, CFCI Senior Manager, Fraud and Forensic Advisory Services [email protected] 303.586.8504
Questions?
Contact & Follow Us https://apstarc.acl.gov/ [email protected]
Adult Protective Services Technical Assistance Resource Center 56
Authority?
Remember…
Case Example
Case Example
Case Example
Authority?
Remember…
Case Example
Case Example
Case Example