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Chapter 8 investigating concealment david shen
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Chapter 8 investigating concealment david shen

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Transcript

  • 1. CHAPTER 8: INVESTIGATING CONCEALMENT David Shen Chen/1209471 1
  • 2. Presentation Outline 2 Introduction of concealment investigation Documentary evidence Apply audit procedure to a case Hard-to-get documentary evidence Document expert Conclusion
  • 3. Concealment Investigation 3 How to get evidence?
  • 4. Concealment Investigation 4
  • 5. Documentary Evidence 5
  • 6. Documentary Evidence 6 What do we need to Know about documentary Evidence?
  • 7. Documentary Evidence 7  Marking the Evidence
  • 8. Documentary Evidence 8  Chain of Custody
  • 9. Documentary Evidence 9  Coordination of Evidence - Software: Xanalys Link Explorer, Analyst's Notebook  Original Documents VS Photocopies - Always apply original document in priority
  • 10. How to obtain Evidence 10  Data-driven approach (Chapter 6)  Audit approach:  Tests of mechanical accuracy (recalculations)  Analytical procedure (tests of reasonableness)  Documentation  External Confirmations  Observation  Inspection  Inquiries
  • 11. The Case 11  The Fraud Restaurant (This story is purely fictional. Any resemblance to actual individuals or events are coincidental)
  • 12. The Case 12
  • 13. The Case 13  What will IRD do after receive this fraud report? A: Ignore it B: Call the restaurant owner (Inquiry) C: General Analysis of company’s tax report (Analytical tests) D: Call the whistleblower (Inquiry)
  • 14. The Case 14  Analytical Procedure Gross profit margin  Similar restaurant 60% The fraud restaurant 40%
  • 15. The Case 15  Direct (Specific Item) Method - Make confirmation of tax report - Understatement of income - Overstatement of expenses - Fraudulent claims for credits or exemptions
  • 16. The Case 16  Inspection Why there are large amount purchase of stock on lobster, but no lobster dish on the menu?
  • 17. The Case 17  Sampling & Observation
  • 18. The Case 18 What is the appropriate sampling method for IRD to estimate one month sales? A: Estimate sales at Friday night, then times 30. B: Estimate sales from Monday to Sunday, then times 4. C: Estimate sales for every single day within one month.
  • 19. The Case 19  Indirect Method - Gather original evidence to support allegation. - Whether the net worth, expenditures, bank deposits and cash are logical based on reported income.
  • 20. The Case 20  Physical examination
  • 21. The Case 21 Do you think the IRD investigator have right to do like this without notice? A: Yes B: No
  • 22. The Case 22  Enquiry
  • 23. The Case 23 Does the restaurant owner have the right to refuse answer these questions? A: Yes B: No
  • 24. How to obtain Evidence 24  Audit approach:  Tests of mechanical accuracy (recalculations)  Analytical procedure (tests of reasonableness)  Documentation  External Confirmations  Observation  Inspection  Inquiries
  • 25. Hard-to-Get Documentary Evidence25  Web-based e-mail accounts  Private bank record  Tax returns  Broker age records  Subpoena  Search Warrant  Voluntary Consent
  • 26. Document expert 26  What they do - Test original signature - Test original document
  • 27. Document expert 27  Organizations of document experts - Questioned Document Section under FBI - American Board of Forensic Document Examiners, Inc. (ABFDE) - Independent Forensic Practitioners Institute Inc. (IFPI)
  • 28. Conclusion 28  Get the document evidence  Test the document evidence  Keep the document