How does a company investigate and collect evidence of suspected embezzlement? Explanation of the investigation process and response to employee embezzlement on the job.

For a company, embezzlement by an employee is a serious problem that can lead not only to financial loss but also to a loss of social credibility. However, many companies may not be adequately prepared with concrete procedures and investigation methods to deal with embezzlement when it is discovered. Forensic investigation" is necessary to investigate and collect evidence of embezzlement. This article will explain from a practical perspective the appropriate response when embezzlement is discovered, the investigation process, and measures to prevent recurrence.

Initial response and procedures within the company when embezzlement is discovered

A wide range of efforts are required to respond to an embezzlement case, from the initial response after the discovery to the implementation of measures to prevent recurrence.

What is embezzlement?

Embezzlement (embezzlement in the course of business) is the act of an employee of a company or other organization illegally using or absconding with money or goods entrusted to him or her in the course of his or her duties.

Initial response when embezzlement is discovered

When embezzlement is suspected, the most important thing is a calm and prompt initial response. First, the facts must be thoroughly ascertained and recorded. Specifically, the chronology of when, who, and how the wrongdoing was discovered should be organized, and the estimated amount of damage and the scope of those involved should be identified as much as possible.

Particularly important is information management at this stage. It is wise to limit the number of personnel involved in the response to the minimum necessary, as the knowledge of anyone other than those involved could hinder subsequent investigations.

Procedures, Methods, and Necessity of Collecting Evidence of Embezzlement

Evidence collection is an important step that can determine the success or failure of the subsequent response. In addition to paper evidence such as accounting books and receipts, digital data such as e-mails and access histories have become increasingly important in recent years.

Particular attention should be paid to preventing evidence from being scattered or falsified. It is important to keep a record of who collected which accounting documents and when, and to back up electronic data as early as possible to prevent overwriting or deletion.

How to proceed with an internal investigation of embezzlement and what not to do and what to watch out for

Again, when embarking on an investigation of embezzlement, it is important to be thorough in confirming the facts and preserving evidence from the very beginning of the investigation. Collect and preserve all evidence such as testimonies of related parties, accounting records, e-mails, surveillance camera footage, etc., to prevent the destruction of evidence such as falsification or modification of data. In particular, since digital data requires specialized knowledge and tools, it is effective to ask for the cooperation of an investigation company.

Other important points to note are that while the confession of the individual is an important factor, it is necessary to secure evidence through preliminary investigation prior to questioning the individual by the company. In addition, excessive questioning may result in legal liability, and should not be forced.

You may also face civil claims for damages and criminal liability for embezzlement. Keep in mind that disciplinary action or criminal charges based on the results of an investigation require strict adherence to legal procedures.

Systems and measures that a company should take to prevent internal fraud, including embezzlement

While post-embezzlement actions after the discovery of embezzlement are essential, the key is to enhance preventive efforts. In order to prevent embezzlement from occurring, specific fraud prevention measures must be taken, such as regular internal audits, a system of mutual checks by multiple employees, and thorough employee training. Such preparations from ordinary times are the most effective measures.

Establishment and implementation of internal controls, including decentralization of authority and a system for checking records

If the company's business processes involve the handling of money, it is necessary to identify the risks and set up rules to manage authority, such as "who should approve, at what stage, and by what type of authorization. Regularly checking operation logs, history, and other records is also a deterrent as well as an early detection. It is also important to conduct internal audits to confirm that the rules are being properly implemented without becoming a mere skeleton.

Employee Education and Awareness

Employee education is an important part of fraud prevention. The reasons why the rules are necessary and the consequences of fraud should it occur should be communicated to employees with specific examples. It is also important to establish a reporting contact point for early detection and early response, and to let employees know that the system is safe and secure, and that those who discover and report fraud will be protected.

Forensic investigation" is effective in investigating evidence of embezzlement.

After an embezzlement is discovered, it is necessary to investigate whether there have been similar cases and to strengthen the system to determine the cause of the embezzlement and to prevent its recurrence. For detailed investigation of embezzlement, "forensic investigation" by a specialized investigation company is effective. The following is a detailed explanation of forensic investigations.

What is a forensic investigation?

Forensic investigation, especially digital forensics, is an investigation method to identify evidence of fraud by collecting and analyzing electronic data left on digital devices. In recent years, the amount of digital data in business has been increasing and so has its importance.

For example, by analyzing the operation logs of an accounting system, traces of unnatural transactions or tampering can be discovered. Also, by recovering deleted e-mails and documents, we can find communications and other evidence of embezzlement.

For forensic investigation, consult a professional forensic vendor.

Since forensic investigations require a high level of expertise and special equipment, we recommend that you contact a specialized vendor. In particular, proper procedures by a specialist are essential to ensure the legal validity of the evidence.

When selecting a specialist firm, it is important to fully confirm the past results of the investigation, as well as the experience and qualifications of the person in charge of the investigation. In addition, since confidential information will be handled, it is essential to select a highly reliable contractor.

The cost of an investigation will vary greatly depending on the size and complexity of the case, but should be considered a necessary investment considering the amount of loss caused by embezzlement, the need to uncover the full extent of the matter, and the subsequent litigation.

Forensic investigation is indispensable for collecting digital data evidence in embezzlement cases.

In many cases of embezzlement, evidence can be obtained from digital data such as cloud storage, emails, and server log files, etc. Forensic investigation is indispensable to ascertain the facts and the amount of damage. By preserving potentially relevant data without omission, and by ensuring that deleted data is recovered and logs are analyzed and analyzed, it will be possible to prepare legally valid materials as evidence.

How to Select a Forensic Investigation Company to Seize Evidence of Embezzlement at Your Company

This section explains the points to look for when choosing an investigation company to commission a forensic investigation.

Does the company have a high level of expertise and a proven track record?

A company with a large number of experience in forensic investigation will be able to select the appropriate method for each case at a reasonable cost, since they have accumulated a high level of technical expertise and know-how in data recovery. In particular, whether or not the company has a track record of being requested by listed companies, the police, or public offices is an important factor in determining reliability.

Whether the company has high technological capabilities, such as the use of AI

The use of AI (Artificial Intelligence) is also an important point. Utilizing AI, which excels at analyzing large amounts of data, can not only improve the efficiency of the survey, but also increase its accuracy by allowing the researcher to focus more resources on the task at hand.

Is it offered at a reasonable price?

The cost of a forensic investigation consists of the cost of data processing and retrieval, as well as analysis and analysis of potential evidence (review) and data hosting, with the review process usually accounting for the majority of the cost. The final cost varies greatly depending on the scope and content of the investigation, and can range from several tens of thousands of yen to several million yen. We recommend choosing a vendor with a clear cost structure that includes additional fees.

In addition, awareness of the use of AI in surveys has been spreading recently, and significant cost advantages can be gained by utilizing AI to dramatically improve survey efficiency. When gathering quotes, be sure to ask for the total cost, including AI and review, and compare not only the unit cost but also the overall cost.

For investigation of evidence of embezzlement at your company, contact "FRONTEO," which has a proven track record and technology in forensic investigation.

FRONTEO has been a pioneer in forensic investigations in Japan since its establishment in 2003, and has handled investigations for many companies. In addition, we have realized highly accurate investigations by utilizing our self-developed AI engine "KIBIT" to achieve cost compression by greatly reducing the labor required for document reviews.

FRONTEO combines its extensive knowledge in handling cases with the advanced technological capabilities of its AI engine to achieve a high level of accuracy and efficiency that no other company can match, FRONTEO's AI engine enables us to investigate embezzlement with a high degree of accuracy and efficiency that no other company can match.

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