After reading about technology frauds, the current trends listed on the RCMP website and the Canadian Anti-Fraud Centre list of scams what do you think the impact these crimes have on Canadian society?
Also consider what we have discussed in regards to the privacy laws in Canada and consider the impact it has on your investigation.
Remain respectful in your discussions, but discuss the benefits and challenges this has for Canadian society and your investigations.
Introduction:
Thus far you have been introduced to Technology Fraud. In this lesson you will be introduced to red flags, precautions of technology fraud investigations, when to call in specialists, privacy act implications and current trends. This foundation will be used in future lessons to enable you to identify red flags and to help you work toward completing a technology fraud investigation.
Learning Objectives:
By the end of this lesson you should be able to:
1. Identify what red flags to look out for in Technology Fraud Investigations
2. List the precautions that must be taken when carrying out a technology fraud investigation
3. Determine at what point an expert may need to be called in to assist you
4. Describe the impact that The Privacy Act has on your investigation
5. Provide examples of current technology fraud trends
Lesson Content:
READINGS:
In this lesson you may be reading from the text, from online sources or directly in the Lesson Content.
Please check your course calendar for the specific readings for Lesson 02
LESSON CONTENT:
1) Red Flags:
Some of the standard red flags in many frauds do not necessarily play in the new technology world. For example one of the things to look out for in a company is someone who never takes vacations. However with the current technology the employee can take vacations, but use remote access to continue the fraud. Imagine today with the advancement of Cloud Computing, you can literally be anywhere in the world with Internet access and be able to access the Cloud. It is not that all red flags are no longer valuable, just that you need to put it in perspective with the possibility of remote access, wireless access and other new or emerging technologies that could provide a fraudster the ability to commit the fraud from well anywhere.
However, some the standard red flags still apply such as living beyond ones means, high personal debt, etc. For more red flags read section 6.1.4 of the ACFI Fraud Manual.
2) Specialists:
If you are involved in an investigation that includes a computer what are your first steps? Do you sit down and start it up and start browsing the files? One of your team members is good with computers, should he or she be the one to look at the computer? Would you connect a removable hard drive to it and backup the contents? If backing up the contents do you just copy in from windows explorer? Would you launch each program and have a look first to see what is there because maybe you don’t really need it and really do not have the time to look at it? Are you not comfortable with computers and therefore decide not to take it at all? How about the smart phone, do you take them, do you look at them at all?
There are a lot of questions that need to be answered, but they can all be answered if you have done proper planning. You need to assume there will be a computer and if there is one what are the procedures you are going to follow. Are you or the members of your team qualified to look at the computer or the new technology that you have encountered? If the answer to this question is no then you will need to either bring in a specialist that can properly examine the computer or retrieve the information from it so that it can be analyzed while protecting the integrity of the evidence. The last thing you want to do is examine the evidence find out it is a smoking gun, but have it tainted because of bad procedures and not being able to use the evidence.
When do you think you should consider bringing in a specialist? What type of specialists can you think of that may be need in a Technology Fraud investigation? Can you afford to ignore a computer system because the client does not want to spend the money? If a client is adamant that they will not pay for a computer specialist, what do you do?
3) Precautions:
If you have been hired to investigate a computer crime, you need to assess what technologies exist, what your knowledge is and how the technology was used, or may have been used in the allegations. Great communication skills are also a huge asset when you are a forensic accountant. Sometimes in any fraud investigation what the clients tell you they need is not what they actually need. Keep in mind you are the expert in this area and what you need to know from the client is what their allegations are, what they want the outcome to be. This does not mean that you want them to tell you the person is guilty. What this means is the client should be explaining to you for example, they want their money back and do not care about prosecution, they may not intend to fire the person anyway and just want to know what happened, they may want just enough evidence to fire the person and defend any wrongful dismissals lawsuits, or they may intend on firing the person and referring the case to the police for prosecution. The reason it is important to know what the client’s intentions are at the beginning is to determine the level of work that is required. This is also a very dynamic time in the investigation and as the investigation progresses the client may change their mind depending on the outcome of your analysis.
If you are wondering how this could impact on your analysis, just think that you have a client and they tell you they do not care how it happened, they just want their money back first. Would this change the way you would do your investigation?
One thing about technology fraud investigations that may be different from regular investigations is the fact you will probably face new technologies in your investigation. When new technologies are seen for the first time you need to be careful. One of the underlying basic principles of a fraud investigation is not to contaminate the evidence. So when you encounter a new technology you need to fully understand it. This may mean you will need to do some research or ask for an expert’s assistance or guidance. You need to ensure that your interaction with the new technology and analysis of it or its content does not alter it in any way. With these types of investigations you will come to understand that keeping up to date with yearly training is essential to be able to at least be aware of the new technologies.
Let’s use a computer as an example. It is not a new technology per say, however analysis of a computer can become a huge problem if not done properly. When discussing specialists, questions were raised as to who should look at the computer and how it should be done. If the computer is turned off and you turn it on have you altered the content of the hard drive? Yes you have, with the Windows operating system it updates files on the hard drive on boot up. While the files may seem unimportant to you, the fact is the hard drives content has been altered and now the reliability of the other evidence on the drive is brought into question. There are tools out there that will let you copy the drive without altering the content and without turning the computer on. We will not go into detail about this in this course; however there is a tremendous amount of software and hardware out there that can help you do this.
Also keep in mind many criminals will have a program set on their computer so that if you do not hit the correct keys the computer will wipe the hard drive and destroy all your evidence.
If you lack the know-how or the equipment to do the data extraction without compromising the data then you need to call in an expert to handle this for you. Planning is crucial to any investigation and without proper planning all your hard work could be down the drain because of one simple mistake that comprised the integrity of the data. Knowing your skills, expertise and limitation is also crucial to becoming a great forensic accountant.
4) Personal Information Protection and Electronic Documents Act (PIPEDA)
With any investigation that takes place in Canada, you need to be aware of the privacy rules that Canada has. We have two main pieces of legislation “The Privacy Act” which applies to governments and the “The Personal Information Protection and Electronic Documents Act” that applies to everyone else. You may wonder why it is important to be aware of this piece of legislation if you are doing an investigation. Well it is quite simple really. If you are not part of a few exceptions such as law enforcement, you may come in contact with personal information which you are now responsible to protect. This means if you lose it you could be subject to legal action. It is also important to understand that information that is readily available in the USA is not available in Canada due to our strong privacy laws. Read through each piece of legislation and think how it could impact an investigation you maybe doing for a client. From a fraud awareness perspective how can the privacy laws be used by fraud perpetrators to protect themselves from being caught?
5) Current Trends:
There is no question that even though few statistics exist in Canada that the current trend is a greater increase in technology related crimes. If you think about the news you have read in the past 30 days, chances are you would have read about numerous crimes that would be classified as a technology crime.
The thing is that as technology advances so rapidly, the crimes also are changing rapidly. With any new technological advance there is someone out there finding a way to use this new advancement for malicious reasons and for personal gain.
The Canadian Anti-Fraud Centre and the RCMP websites are great resources for current trends within Canada. After reviewing the websites and looking at the new trends emerging in Canada, think about how each of these pose challenges and how you would be able to solve these types of cases. Another great resource is Interpol’s website, another one of the reading assignments for this lesson. The great thing about Interpol’s website is that it gives you a great deal of information on how the new technology could be used for malicious purposes and how to prevent it.
Summary:
While some red flags for standard fraud investigations apply, some are somewhat thrown out the window, due to technological advancements that allow people to commit frauds virtually from anywhere in the world.
It is important to know your and your team’s limitations so you understand when the time is right to bring in an expert to assist you with your case. One thing about technology fraud investigations is that you must still follow the same procedure you would in any other fraud investigation and that is preserving the evidence. This along with proper planning is the essential basis for an effective fraud investigation.
Understanding Canada’s privacy laws is essential if you plan on doing any investigations in this country. We have some of the toughest privacy laws in the world and you will need to know what your responsibilities are or you could be facing legal action yourself.