Investigation Uncovers Multiple Fraud Risks
Situation:
When a major level IV hospital learned that its newly appointed CFO had been accused of embezzlement by his previous employer, the hospital’s internal audit team requested a focused investigation to determine if similar fraudulent activities had occurred within their organization. Brian Forensics was engaged to conduct a limited-scope assessment, which is a targeted review focused on specific allegations or incidents. The findings from this initial assessment would help the hospital decide whether to proceed with a full financial fraud investigation.
Strategy:
Our team of financial fraud investigation and forensic examination experts developed a methodology that moved from general to specific to identify the organization’s most vulnerable areas. The Brian Forensics team held discussions with key stakeholders at the hospital and evaluated the CFO’s system access and assigned roles and responsibilities. They also tested transactions and scrutinized data for irregularities, focusing on areas such as bank transactions, employee expense reimbursements, accounts payable, PPP loan transactions, and journal entries.
Results:
Based on our assessment, the hospital concluded that a full financial fraud investigation into the CFO’s activities was unnecessary. However, the review provided the hospital with a critical list of potential vulnerabilities in its financial practices that significantly increased the risk of fraud, waste, and abuse. Brian Forensics recommended several measures to strengthen the hospital’s internal controls and enhance its fraud prevention program.
This case highlights the importance of engaging an experienced investigative team when fraud is suspected. Financial investigators, such as certified fraud examiners (CFE), not only gather and analyze relevant data but also ensure that assessments are conducted effectively and efficiently. They help determine if wrongdoing has occurred and propose best practices to prevent future fraud.
