by Jim Marasco, CPA, CFE, CIA Fraud Matters, Spring 2007

Conducting a third-party or corroborative interview is a key step in most fraud investigations and should be conducted by experienced professionals. There may be only one chance to interview an individual in an investigation, so investigators must make the most of it. It is important that a trained investigator conduct that interview. Interviews are “the stock-in-trade of investigators,” Joseph Wells, chairman and founder of the Association of Certified Fraud Examiners, said in the February 2007 issue of The CPA Journal. There are legal implications that should be considered. Tape recording interviews, issuing Miranda rights and using interrogation techniques are areas that should be left to experts. Interviewing techniques vary. Our trained experts can help you understand the process. The basics follow.

Being prepared

The most efficient and productive interviews are accomplished by advanced preparation. Questions should be prepared ahead of time along with evidential material that will be introduced during the interview. Having documents at your fingertips will move things along more quickly and offer the impression that your case is organized and solid.

Gaining cooperation

Employees have a duty to cooperate during an internal investigation as long as what is being requested is reasonable. The fraud investigator must be careful to voluntarily seek the assistance of the subject and not restrict his or her ability to leave the interview. During the introductory phase of the meeting, the objective should be to reduce the subject’s anxiety, establish a rapport and set the format of the discussion. Notes can be taken as the interviewer works though the initial stages of the interview. Always note the subject being interviewed, date, time and place where the interview is being conducted. Changes in body language and tone to specific areas of questioning should also be noted.

Explaining the purpose

Once background data is gathered, the interviewer should introduce the purpose of the task without giving away too much information. For example, you might explain that you are seeking the individual’s cooperation in learning about possible inventory shrinkage at the warehouse, not necessarily that the subject is the suspected target of the investigation.

Questioning the subject

While questioning an individual, the interviewer should consider certain protocol.

• Use open-ended questions that offer little information but force the subject to speak about the topic. For example, “Explain to us how the cash deposit is prepared each evening.”
• Don’t interrupt. Allow the subject to speak freely and offer ample time before directing additional questions.
• Don’t offer information and don’t do most of the talking. The investigator’s role is to gather information.
• Clarify ambiguities without challenging. Inconsistencies may reveal lies that have been told. Be sure to follow up on these points, but don’t alienate the subject. Your job is to use the information gathered as one piece of the investigation.

Closing the interview

The interview should be wrapped up once you have exhausted your questions and determined that no more relevant information can be gleaned. Be sure to inquire whether the subject has anything more to add or whether something else should be discussed. Provide subjects with your contact information in case they think of something later. Likewise, request their permission to contact them for additional information or clarification as your investigation proceeds. Finalize by thanking them for their cooperation.

Using the interview as a tool

Once the interview is completed, promptly type up your notes. It’s best to summarize while thoughts and observations are fresh in your mind. If another individual was in the interview with you, compare notes and discuss relevant points revealed during the discussion. Depending on the success of your interview, your fraud case can be set in motion. Experienced investigators use this opportunity to build their case. It could be the most rewarding aspect of an investigation.

James I. Marasco, CPA/CFF, CFE, CIA Jim is a partner at EFPR Group. He brings more than 18 years of public accounting and auditing experience. He is a full-time management consultant and travels extensively throughout the country while leading StoneBridge Business Partners (an EFPR Group affiliate company). Article republished with the permission of CPAmerica.