An investigative audit, as its name implies, combines two professional elements with essentially different attributes: accounting auditing and investigation. Auditing is a professional methodology founded on accounting principles, standards and theory. Investigation, on the other hand, is based on general principles that serve as guidelines and requires an investigator that is capable of "thinking outside the box", preferably in combination with the use of intuition. What is this "thinking outside the box" and "use of intuition" that are considered so important in investigative work, and especially in investigative auditing?An investigator may be equated to a hunter who wishes to hunt the offender. The investigation, like a hunt, requires the development and application of several skills: A critical approach, flexible thinking and the ability to doubt assumptions and suppositions (open mind) Ability to develop and implement solutions for changing situations (practical dynamic) Ability to understand and study the way of thinking and behavior of the person being investigated High level of professional integrity An approach based on appreciation of the person being investigated Independent, low profile work On the other hand, the auditor's work is based on professional methods and standards in which there is usually no room for personal development and they must be applied as-is, while cooperating with the person being audited. The need, therefore, to combine the skills is not self-evident, and therefore a professional specializing in investigative auditing must, first and foremost have the natural as well as acquired skills of an investigator who uses know-how in the field of auditing. In quite a few cases, investigative auditing is conducted by accounting firms that provide external auditing services on an ongoing basis. In such cases, the professionals may use professional work methods and approaches that are accepted in auditing, but are not suitable for investigative auditing, and therefore may cause failure of the investigation. In this article, I will present an example of this type of investigation, analysis of the causes of the failure, and offer an alternative way to conduct the investigation: In a large manpower agency, large scale embezzlement by the company's HR manager was discovered. The manager served as the company's acting VP. The embezzlement and its perpetrator were discovered by chance, after one of the owners (the CEO) noticed in the bank account that a check was paid out to an employee that was fired six months before. When he checked the identity of the person cashing the check, he discovered that this was the HR manager. In addition, they found that the employee had been issued salary slips for the entire period during which he no longer worked for the...
Authentic Thinking In Tasks Requiring Investigative Auditing
|Author:||Mr Doron Bergman|
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