Blog 11 & 12 - Mock Trial

Given what I’ve learnt about the expert witness role, court procedures, and of course what I’ve learnt during the mock trial, I would say the role of the expert witness is challenging and should not be taken lightly!

I think the most important part of being an expert witness is ensuring you know the report inside out. You would think this wouldn’t be too difficult considering many expert witnesses write the reports, however I discovered that there can be times where you can be called to be an expert witness even if you didn’t write the report. You can also write a report, and then be called to give evidence 6 or 7 years later, which in that case you would need to familiarise yourself with the content again to make sure you have a thorough understanding of what you’re defending in court.

 

Giving verbal evidence isn’t particularly straight forward. Obviously, there are barristers there who will try and force an answer out of you, and for some that can be quite intimidating and stress inducing, especially during cross examination. The challenge really is mastering the act of staying calm, staying on topic, and answering the questions that are asked. If you get off topic you run the risk of putting the whole case at risk, as being an expert witness is only a very small portion of the whole case. Ultimately the expert witness needs to remember they are there to serve the court, and not to get into an argument.

The Mock Trial gave students a chance to defend a report that wasn’t written by them, which isn’t particularly easy. One of the issues with the students giving evidence is that the majority of students didn’t really address the judge when answering the questions, and thus it was more of a conversation between the expert witness and the judge. When giving evidence, it’s pivotal that you do give your answer to the judge, because ultimately they are the ones that will decide on the facts, and they need to hear the facts from the witness.

I think general nervousness and anxiety caused many students to be flustered and challenged at times, but that was expected for the first time. Generally, the barristers, although intimidating at times, helped the students out if they felt like they didn’t know something or they were struggling. I also thought it was interesting when one of the barristers said that they form their conclusion first, and then work backwards to form the questions that they’ll ask the witness.

Coming back to the report itself, the Judge stated at the beginning of the mock trial that it’s not scary if you know what you’re talking about, and you know what you’re defending. What made the mock trial particularly challenging was the fact that students didn’t write the report and had to try to gain and understanding of the whole case in such a short period of time. 

Blog 10 - Cyber Crime

I think if anything, the notion of cyber-crime should be dealt with just as much as “regular” crime within an organization. This is because we live in a digitalised world. Organizations need to be ready to keep up with the rapid change of platforms such as the internet, and need to deal with the consequences of a world run by technology.

                          

For example, in 2012 alone, cyber-attacks on businesses rose 300% from 2011 (Brandon, 2014). I think the scary thing is that cyber-attacks are only increasing, and can hit large corporations just as much as they can affect small businesses (Hausken, 2007). We only have to look as far as Apple with the iCloud scandal, or the Sony hack to know that even if larger corporations have high security in regards to fraud prevention, there is always a possibility that someone will get through (Dawson, 2015).

Even from a personal standpoint I’ve learnt to go the extra mile to protect myself from cybercrime. Simple things like not using internet banking, changing passwords, and using virus protection. Every little thing counts, and businesses should not take any risks if it means they could potentially lose their money, reputation, or any other valuable assets.

The following are recommendations that should be used as a guide for businesses who are willing to protect their business from cyber-attacks.

5 Key Recommendations:

1. Educate all employees on the topic of cybercrime, and force them to change their computer password regularly. Also educate them on issues like fake emails and malware.
2. Regularly update all computer systems, in order to block attacks from being able to take advantage of software flaws.
3. Review financial statements regularly (and bank and credit card statements).
4. Install security software (strong antivirus) and encryption technology onto all computer systems.

References

Brandon, J. (2014). Why Your Business Might be a Perfect Target for Hackers. Retrieved from http://www.inc.com/magazine/201312/john-brandon/hackers-target-small-business.html

Dawson, F. (2015). What The Sony Hack Can Teach About Cyber Security. Retrieved from http://www.forbes.com/sites/freddiedawson/2015/02/27/what-the-sony-hack-can-teach-about-cyber-security/

Hausken, K. (2007). Information Sharing Among Firms and Cyber Attacks. Journal of Accounting and Public Policy, 26 (6), 639 – 688.

Blog 9 - "Hot Tubbing"

The idea of experts giving evidence concurrently, or “hot tubbing”, is an interesting one. In fact, Australia has been acknowledged for having the most “hot tubbing” experience within the courts (Rares, 2013).  

Although there are advantages to the hot tubbing method, I can’t help but look at the disadvantages. After conducting some research I found that Henry Ergas, an economist, as well as Davies J (formerly of the Court of Appeal), have also expressed concerns about the hot tubbing method. It is their belief that they may result in a more persuasive, confident or assertive expert winning the judge over, simply by overshadowing the other witness (Croke, 2013). Although it can result in shorter proceedings, Henry also argues that the process is too expensive as well as too adversarial, thus undermining the integrity of the court.

Interestingly however, after talking to a friend of mine who studies law, he states that there are lots of advantages to the process, mainly because it gives experts a “real responsibility” and that it is just a “natural move forward” from the current court process.

It appears to me that the experts would need to be chosen wisely. For example, if there was one expert that was a lot more confident or assertive than the other, it might lead to an unfair advantage. There are also the simple issue with the concept, such as availability of the experts, or the cost of the pre-trial preparation (Rares, 2013). Cross examination would be different, and the parties don’t have access to their experts during breaks, so clarification is limited. 

Ultimately, it represents a substantial difference from the traditional approach to giving expert witness (Korda Mentha, 2013). Some may say that this is a good thing, but other aspects of the court process would have to change to keep up with it.

References

Croke, A., Mallon, L. (2013). Hot-tub: lessons from Australia. Retrieved from https://www.ashurst.com/publication-item.aspx?id_Content=9604

KordaMentha. (2013). Some like it hot! Expert views on judicial orders to hear expert evidence concurrently. Retrieved from http://www.kordamentha.com/docs/for-publications/issue-13-01-some-like-it-hot

Rares, S. (2013). Using the “Hot Tub.” Retrieved from http://www.fedcourt.gov.au/publications/judges-speeches/justice-rares/rares-j-20131012

Blog 8 - Interviewing

Blog 8 – Interviewing

The notion of interviewing should not be overlooked by the Forensic Accountant. It is a possibility that interviewing will form part of a Forensic Accountant’s career at one point, and therefore getting it right early on is vital. Usually, those who have great skills at interviewing are better positioned to obtain evidence and solve crimes (Korda Mentha, 2013). Not only this, but Forensic Accountants who are skilled at interviewing are better off in all walks of life, both professionally and personally (AICPA, 2013).

I think it’s rather interesting how Forensic Accountants get to undertake many roles, interviewing being one of them. Generally, I would say that people assume that interviews are undertaken by police investigators, who perhaps have more standardized training than an accountant may have.

In 2000, there was a case that went through court which involved forensic accountants. In R. v. Reid, the judge viewed statements made by the suspect to two forensic accountants employed by KPMG, as inadmissible. The judge ruled that Reid’s statements were inadmissible because the accused reasonably believed that the Forensic Accountants were persons in authority and the statements were not obtained voluntarily.

So, it’s obvious that Forensic Accountants need to go about their investigation the right way, and subsequently be able to conduct interviews effectively. Not doing so can put a case at risk, and ultimately the client needs to come first.

A strategy must be in place and relevant questions should be asked. I also think it’s important that the Forensic Accountant doesn’t lose sight of his or her purpose in the investigation, and that they keep a clear objective in their mind. Although a confession may be elicited based on the evidence produced by the forensic accountant, interrogation normally is reserved for experienced specialists such as law enforcement officers (Porter, 2013).

References

Porter, S. (2013). THE CONFESSION INTERVIEW: ETHICAL, LEGAL, AND PSYCHOLOGICAL IMPLICATIONS FOR THE FORENSIC ACCOUNTANT. Retrieved from  http://www.acfe.com/uploadedFiles/ACFE_Website/Content/canadian/2013/presentations/5B-Scott-Porter-cpp.pdf

American Institute of CPA’s. (2012). Conducting Effective Interviews. Retrieved from http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/PractAidsGuidance/DownloadableDocuments/10834-378_interview%20whiite%20paper-FINAL-v1.pdf

Korda Mentha. (2013). Advanced Interview Techniques. Retrieved from http://www.kordamentha.com/docs/for-publications/1105-AdvancedInterviewTechniques.pdf?Status=Master

Blog 7 - Profiling Fraudsters

I somewhat agree with the view that the Fraud Triangle addresses both why fraud occurs, and why individuals turn to fraud, however I do think there are some grey areas that need to be addressed. Why? Mainly because the Fraud Triangle fails to really touch on organizational sub groups, nor does it touch on the aspect of bribery or corruption. What the Fraud Triangle does explore is the three recipes for fraud: opportunity, pressure, and rationalization (IACPA, 2009). 

The “pressure” side of the triangle can be compared to and webbed with the General Strain Theory (GST), which outlines that emotions like anger (which create pressure for crime) are increased by strains or stressors (Agnew, 2011). For example, if someone were to be very tight for money and had a family to care for, that type of pressure might encourage an individual to commit fraud.

Differential Association, on the other hand, is wholly centralised on the idea of the power of social influences and learning experiences (Short, 1957). That is, “the conditions which are said to cause crime should be present when crime is present, and they should be absent when crime is absent. It is a notion of differential social organizations, rather than a lack of social organization.

I suppose how this ties in with the fraud triangle is that, having social influences increases every side of the triangle in some way. There may be increased pressure, an increased opportunity to commit crime or even an increase in rationalization if somewhat feels they are accepted enough. However the fraud triangle still doesn’t really outline bribery or corruption explicitly, which is why I think theories such as differential association and GST came about – the fraud triangle cannot apply to every fraud scenario in the real world.

References

IACPA, (2009). The Fraud Triangle and What You Can Do About It. The Certified Accountant (37), retrieved from http://www.lacpa.org.lb/includes/images/docs/tc/tc363.pdf

Agnew, R. (2001). Building on the foundation of general strain theory: specifying the types of strain most likely to lead to crime and delinquency. Journal of Research in Crime and Delinquency, 38 (4), 319-361. Retrieved from http://www.d.umn.edu/~jmaahs/MA%20Theory%20Articles/Agnew%20GST.pdf

Short, J. F. (1957). Differential association and delinquency. Social Problems, 4(3), 233-239. doi:10.2307/798775

Blog 5 - The Expert Witness (Forensic Accountant)

In a court of law, there are many guidelines and proceedings that must be taken seriously. Being an expert witness is no different. An expert witness exists solely to provide an opinion that is basely on their substantial knowledge of the subject in which they are an expert in.

I imagine that the formalities of the court do overwhelm some people at the start. The first time I visited the courts was during a school trip, where we were watching a highly publicized manslaughter case. The expert witness that I got to see was a female doctor, and it became quite clear what her role was within the court, and how important this role was.

Chapter 4 of “The Accountant as an Expert Witness” states that guidelines in related to the expert witness are “to assist experts to understand in general terms what the Court expects of them” (Hoffman, 2013). It is expected that the witness will comply with these guidelines – but why?

The requirements of an expert report are set out under paragraph 2 of the Federal Court of Australia’s practice note CM7. All of these requirements are essential to the clarity and honesty of the court. For example – the expert should make it clear if a particular question or issue falls outside the relevant field of expertise. If this rule didn’t exist, it opens up the door to misleading information which can have a severe affect on the case.

References: 

J L B Allsop, Chief Justice. (2013). Practice Note CM 7: Expert witnesses in proceedings in the Federal Court of Australia. Retrieved from

http://www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/cm7

Hoffman, R. (2013). The Accountant as an Expert Witness - A Basic Guide to Forensic Accounting (2nd ed). Sydney, NSW: CCH Australia. 

SEAK, Inc. Excellence in Education Since 1980, (2012, September 14). The Role of the Expert Witness at Trial [Video File]. Retrieved from https://www.youtube.com/watch?v=9K6U_iQbHY8

Blog 4 - White Collar Crime

  

I think its absolutely essential for professionals and business owners to have a sound understanding of what white collar crime is, and how severely they can affect a business. White Collar Crimes can be described as crimes that are usually done discreetly, like fraud or money laundering. They are distinguished from regular crimes because they are non violent, however this doesn't mean they still can't do a heap of damage to an individual or business.

After browsing online, I found Australia is an absolute paradise for criminals that commit white collar crime, states Greg Medcraft, Commission chairman for ASIC (Australian Securities and Investments Commission), (Mitchell, 2014).

This got me thinking, why? Is it because the punishment of corporate offences is just too lenient? Or is it because business owners don't have a proper understanding of these crimes, and subsequently don't know how to prevent it?

It seems to me like White Collar Crimes are somewhat swept under the rug in many businesses. It doesn't help that when businesses are victims of white collar crime, many of them don't report it, out of either fear of bad publicity, or the embarrassment of being a victim to a so called "honest" employee (Payne, 2012).

It's evident that if you know about these crimes and how they occur in organizations, you could prevent the loss of millions. Additionally, if you take out the "opportunity" side of the fraud triangle, perhaps by implementing strong internal controls, you will no doubt lower the risk of White-Collar Crime.


References

Mitchell, S. (2014). Australia 'paradise' for white-collar criminals, says ASIC chairman Greg Medcraft. Retrieved from http://www.smh.com.au/business/australia-paradise-for-whitecollar-criminals-says-asic-chairman-greg-medcraft-20141021-119d99.html


Payne, B.K. (2012). Understanding White-Collar Crime. Retrieved from http://www.sagepub.com/upm-data/43839_2.pdf

Blog 3 - Regulation for Forensic Accountants

To me, it seems like being a forensic accountant is a career that is always changing. Why? Because the world is changing. Technology, the internet, the amount of data on this earth is breeding at a rapid pace, and what worked for the forensic accountant 10 years, ago just won’t work in this day and age.

With a digitalized world, the tightening of regulation enables professionals to meet greater demands, as indicated by the Honourable Michael Kirby AC CMG (2011). I think its natural to assume that if technology continues to develop, the role of a forensic accountant is going to have to adapt and mould into something new every few years. When clients rely on you for advice, it’s absolutely imperative to keep up with the development of not only Accounting standards, but the regulatory environment (BDO, 2014).

Speaking to a family friend recently who is an Accountant, she was explaining to me how she frequently gets notifications about any changes in the law. On top of this, she is also travels frequently with colleagues to attend conferences that discuss regulatory change in her particular sector. I think this proves that regulatory changes and changes in the law are taken very seriously by the everyday Accountant. 

References

BDO. (2014). Singapore's 100 Leading Graduate Employers 2013/14. Retrieved from http://www.bdo.com.sg/GTIMediacollated.pdf 

Kirby, M. (2011, March). Forensic Accounting - New Rules and Opportunities . Presented at the Business Valuation and Forensic Accounting Special Interest Groups Conference. Retrieved from http://www.michaelkirby.com.au/images/stories/speeches/2000s/2011/2525-FORENSIC-ACCOUNTING-CONF-MARCH-2011.pdf

Blog 2 - Risk

Because risk is a huge part of IT governance, COBIT 5 for Risk should be a common reference for business owners. It focuses specifically on providing guidance for risk professionals, and provides a comprehensive set of risk scenarios (ISACA, 2013). 

If we look at how businesses manage risk in a real world context, we can look at an example structure within an organization that minimizes risk. 

Where I work, the associate working on the floor will count the till first, and then the supervisor/manager must count it for a second time to make sure everything adds up correctly with what the figure says on the system. This is one example of implementing an organizational structure outlining separation of duties (Harmer & Geoff, 2014) which is a key enabler used in order to mitigate risk.

Using enablers allows a holistic approach. This is needed in order to meet stakeholder requirements, as well as integrating operations and security (Van Akkeren, 2015).

Below are 5 precautions that I think organizations should take in order to avoid risk:

Ensure there is a positive workplace culture, by creating a tone at the top which promotes ethical and reliable practices within.

Outline and explain comprehensive fraud related policies to all workers.

Maintain adequate internal controls (is separation of duties) which are monitored and revised consistently.

Conduct an internal audit.

Conduct background checks on new employees.

References

ISACA.(2013). Cobit 5 Framework. Retrieved from http://www.isaca.org/COBIT/Pages/COBIT-5-Framework-product-page.aspx

Harmer, Geoff (2014). Governance of Enterprise IT based on COBIT 5 : A Management Guide. Retrieved from http://www.eblib.com

Van Akkeren, J. (2015). AYB115 Governance, Fraud & Investigation. Week 3: [Slides]. Retrieved from https://blackboard.qut.edu.au/webapps/blackboard/content/listContent.jsp?course_id=_116816_1&content_id=_5376704_1&mode=reset 

Blog 1 - Tone From the Top

The key focus of IT governance revolves around the concept of managing risk and security to safeguard IT information and systems (ISACA, 2015). Senior executives/managers have the power to create a tone from the top that will ultimately minimize IT related risk in their business (LoParrino & Jaros, 2014).

Good workplace culture, ethics, and behaviour is the answer. Outlined in COBIT 5, this enabler focuses on creating, encouraging, and maintaining desired behaviour. This includes senior management setting an example of what to do, and what not to do.

I work for Australia’s biggest retail company, and managers have always been straight with us about the consequences of stealing, which happens to be immediate termination of employment. After seeing people that I’ve worked with for years just make one mistake and go, I’d say it works as a deterrent to try anything similar. 

"Foil Fraudsters with Strong Internal Controls"

We only have to look as far as Enron (The Economist, 2002), or Worldcom (Atlas, 2015), to know that unethical practices within businesses aren't uncommon, even in large corporations. As we’ve seen a significant rise in the use of technology and social media in the past decade, it would be silly to avoid the topic of IT governance, and the vital role it plays in our society.

References

Atlas, S. (2015). WORLDCOM'S COLLAPSE: THE OVERVIEW; WORLDCOM FILES FOR BANKRUPTCY; LARGEST U.S. CASE. [online] Nytimes.com. Available at: http://www.nytimes.com/2002/07/22/us/worldcom-s-collapse-the-overview-worldcom-files-for-bankruptcy-largest-us-case.html [Accessed 12 Mar. 2015].

Jaros, N. LoParrino, M. (2014). Tone From the Top. Ernst & Young. Available at: http://www.ey.com/Publication/vwLUAssets/EY_-_The_value_of_an_active_board_of_directors/$FILE/EY-tone-from-the-top.pdf [Accessed 12 Mar. 2015].

The Economist, (2002). The real scandal. [online] Available at: http://www.economist.com/node/940091 [Accessed 12 Mar. 2015].

Carrriggs. (2011, March 18). Foil Fraudsters with Strong Internal Controls [Video File]. Retrieved from https://www.youtube.com/watch?v=0BBXWkxwo_0

ISACA.(2015). Cobit 5 Framework. Retrieved from http://www.isaca.org/COBIT/Pages/COBIT-5-Framework-product-page.aspx