The document discusses investigating concealment through documentary evidence. It outlines obtaining evidence through audit procedures like analytical tests, inquiries, inspections, and confirmations. It provides a case example of an IRD investigation of a restaurant for tax fraud through analyzing financial documents, sampling sales, and questioning the owner. Obtaining hard to access documents may require subpoenas or warrants. Document experts can authenticate signatures and original documents.

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
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 Marking the Evidence

8. Documentary Evidence
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 Chain of Custody

9. Documentary Evidence
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 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
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 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
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 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
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 Direct (Specific Item) Method
- Make confirmation of tax report
- Understatement of income
- Overstatement of expenses
- Fraudulent claims for credits or exemptions

16. The Case
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 Inspection
Why there are large
amount purchase of
stock on lobster, but
no lobster dish on
the menu?

17. The Case
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 Sampling & Observation

18. The Case
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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
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 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
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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
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 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
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 What they do
- Test original signature
- Test original document

27. Document expert
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 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