Forensics Journal - Stevenson University 2012

STEVENSON UNIVERSITY Thinking Outside the Box: Using Financial Forensics in Non-Financial Investigations Denise R. Harding On September 11, 2001, nineteen individuals hijacked four commercial aircraft. The first two were flown into the World Trade Center towers in New York City. The third was flown into the Pentagon, and the fourth crashed into a field in Shanksville, PA. While first responders were conducting search and rescue operations, law enforcement agencies began the investigative search to identify the hijackers. Investigators and financial analysts joined forces to track each hijacker’s history in the United States and beyond. Investigators used forensic accounting techniques to identify information found in credit card transactions, bank records, rental histories, and travel patterns to piece together the stories that led them back to the terrorist training camps in Afghanistan and to Al Qaeda. Ten years later, accountants and investigators have returned to their traditional roles; but should they wait for another catastrophic event to break those molds? Terrorism, organized crime, and violent crime leave behind traces of information and applying forensic accounting techniques to non-financial criminal investigations could provide valuable information for solving those crimes. Government, identified eight core skills involved in financial investigations: knowledge of the information available for the investigation, the ability to find and compile information, the ability to evaluate the information for relevancy, accuracy and authenticity, documentation and record keeping, organization, data protection, working with others, and the ability to learn and adapt with technology (Kennedy, 2007, p. 396). Like forensic scientists, forensic accountants also use a scientific methodology to hypothesize what occurred and test the hypothesis through investigation (Freeman, n.d.). THE NEED FOR FINANCIAL FORENSICS IN NON-FINANCIAL INVESTIGATIONS The methodology, education, training, and experience of forensic accountants rivals that of other forensic scientists, but Certified Public Accountants, Certified Fraud Examiners, and business professionals focus on financial investigations and rarely offer assistance on non-financial criminal investigations. Annual training conferences in forensic accounting and fraud investigations offered by the American Institute of Certified Public Accountants and the Association of Certified Fraud Examiners focus on financial investigations and financial motives (Association of Certified Fraud Examiners, 2012; American Institute of CPAs, 2012). Financial experts are taught in school and throughout their continuing education that their expertise is for investigating financial crimes and fraud. Non-financial investigations are not typically discussed. WHAT IS FORENSIC ACCOUNTING? Forensic accounting is the use of accounting methods and techniques to identify financial evidence suitable for use in a court of law. The practice of forensic accounting consists of two primary branches: civil litigation and investigative accounting. Civil litigation support involves testimony by an expert witness and the critique of other expert witness reports, while investigative accounting focuses on the financial investigation (Zysman, n.d.). Both branches use similar techniques to identify assets, calculate losses, and reconstruct financial transactions and activity. Alan Zysman states in “Forensic Accounting Demystified,” that forensic accountants are, “trained to look beyond the numbers” (Zysman, n.d.). Forensic accountants are not just accountants; they must have an understanding of criminal law and criminal investigative techniques. The American Institute of Certified Public Accountants’ Forensic and Litigation Services Committee describes a forensic accountant as a professional who uses a combination of skills in accounting, auditing, finance, the law, research, evaluation, analysis, and written and oral communication to interpret financial information and report their findings (Houck, Morris, & Riley, 2006, p. 68). Non-financial criminal investigators are often unaware of the information forensic accountants can identify. Most law enforcement officers do not have training and expertise in financial crimes and transactions. Local, county, and state law enforcement agencies focus on violent crimes, such as rape, robbery and homicide. The limited number of officers trained in financial crimes often have too many property, white collar, and asset forfeiture investigations to have the luxury of applying their skills to non-financial investigations (Manning, 2005). Some federal law enforcement agents are beginning to recognize the benefits of applying forensic accounting to non-financial crimes. Naval Criminal Investigative Service (NCIS) Supervisory Special Agent (SSA) Charles King began his career in law enforcement as an officer with the West Virginia State Police. He joined NCIS in 2005, and spent the majority of his law enforcement career working death investigations and violent crimes against persons. SSA King claims “financial capabilities are underutilized” in criminal investigations. Over the past fourteen years, SSA King conduc

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