Being an Expert Witness in Court

Recently, I was given the opportunity to participate in a mock trial as the forensic accountant expert witness for the prosecution. I must admit it was a very nerve racking experience, but one that will stick with me for life. It was a great learning experience and will help me in my professional career in years to come. I'm glad I got the opportunity to partake in this mock trial as I would not want to make the mistakes I made in the mock case in a real world case as an expert witness as I most likely would of got the expert report thrown out of evidence. 

Most importantly, I learnt the seriousness of understanding and knowing the material you are putting forward to the court. My main down fall was not having a full understanding of the report in order to answer and deflect the barrister’s questions. Paul Vincent, our judge also reiterated this fact after our trial. As a forensic accountant he has sat many trials being an expert witness, he stated being 100% knowledgeable with your material is especially important at the time of the trial as the barristers could potentially tell you to change sections of your report depending on what has been heard in court that day. Also, barristers could question you with ‘what ifs’ based on your conclusions within your report.

Another learning curve come when the barristers were picking apart specific words I said in response to their questions or words that were written in the report; for example, 'it is likely', 'I think', 'maybe'. This proved to me how critical it is to consider the language you use when constructing your expert report and when giving evidence in court as it gives the barristers room to discredit you. 

Additionally, it is important to look at the judge when giving your answers, not the barristers, as I instinctively did. This way the judge remains engaged with what you are saying, after all you are trying to convince the judge of your answers, not the barristers. If the judge feels engaged with you, they are more likely to believe and consider what you are saying.

The most important recommendations I would make to any budding forensic accountants after my experience would be:

• be prepared and confident with your answers
• don't be defensive when being questioned about your report
• be aware of the laws that govern you within the state you are presenting evidence in
• know how to communicate your point well and clearly 
• be aware that you have a duty to the court, not your client
• think before you answer questions and ensure you understand the question

Overall, it was an eye opening experience for myself; I took many beneficial lessons out of it that will be of great use to me in the future. I definitely under estimated the pressure of being placed in the witness box, the barristers take everything you say and can turn it against you very quickly, discrediting your whole report. This proved to me that even with a well prepared and well-structured report, there is still preparation to be done for your court appearance; not just turning up on the day and answering questions.

 

Relevant Links:

Tips for Expert Witness'

Forensic Accounting and the Expert Witness

Section 23.15 of the Federal Court Rules and Forensic Accountants?

The court has introduced rules into the Federal Court Rules (2011); section 23.15 which state if at least two expert witnesses are involved in a case, they can confer on their reports and only bring to court items on which they disagree on, disregarding all items they agree on. This most importantly, reduces time wastage in court. Also, this approach can reduce bias of the expert witness as they are forced to deliberate with the opposite sides expert witness (Reifert, E., 2011). This helps experts with the expectation of them working for the court and help them to adopt a partisan position (Pannone, 2015). Also, by having expert's confer with each it can confirm the expertise and correctness of the experts reports.  

Section 23.15 provides the Court with control to receive expert’s evidence in particular ways, most commonly, the ‘hot tub’ style, which requires expert’s to give evidence concurrently (Lander, B., 2011). As with all governing laws with giving evidence, this section of the Federal Court Rules 2011 is enforceable and should be understood among all forensic accountants wishing to become expert witnesses.  

With my experience of working in group assignments as a student of QUT, I can relate to this rule in particular as you need to be able to present your work to other colleagues and stand by what you have written. You also have to be able to work with others to get the job done.

To help a first time forensic accountant expert adopt to this section with the Federal Court Rules, I would suggest to:

• Remain Partisan
• Stand by your work
• Work with the other expert/s to present your disagreements to the court

Relevant Links:

Section 23.15 of the Federal Court Rules (2011)


References:

Lander, B. (2011). Justice Lander Presents the Federal Court Rules. Retrieved from http://www.hearsay.org.au/index.php?option=com_content&task=view&id=1116&Itemid=4

Pannone. (2015). Hot Tubbing for Expert Witness?. Retrieved from http://www.pannone.com/media-centre/articles/medical-negligence-articles/hot-tubbing-for-expert-witnesses

Reifert, E. (2011). Getting into the hot tub: How the united states could benefit from australia's concept of "hot tubbing" expert witnesses. University of Detroit Mercy Law Review, 89(1), 103. Retrieved from http://heinonline.org.ezp01.library.qut.edu.au/HOL/Page?handle=hein.journals/udetmr89&collection=journals&page=103

Can Fraud, Bribery and Corruption be Minimised with the Culture of an Organisation?

The culture of an organisation is greatly important in regards to fraud, bribery and corruption. If employees think they can get away with defrauding the organisation, more likely than not, they will. It has been found that an organisations susceptibility to fraud is related to the organisations culture and management style (Tan, Chapple, Walsh, 2015). Honesty and integrity is a desirable culture within an organisation.

Even in my own life I can relate to responding to the culture set within my family. For as long as I remember my family has gone without private health insurance, thinking the cost of having it outweighed the cost of not having it. When I turned 18 and moved out of home I had the choice to take up private health insurance and unconsciously made the decision not to, as that was what I was used to being around.

An example of bad culture being introduced into an organisation, would be if an employee was found to be defrauding the company by taking cash and misreporting it in the accounting systems and management did nothing to punish the employee but rather just brushed it under the rug and moved them to a different section of the organisation. By doing this, the organisation is opening itself up to employees knowing that they don’t care about fraud and will most likely react the same to them if they were caught.

After considering my own experiences with how the culture in my family influenced my decision, I would recommend to CEO’s:

• To care about honesty of the employees
• Respond to conduct breaches by employees; have zero tolerance
• Ensure there is an internal and external audit team regularly auditing the organisation
• Ensure management leads by example (tone from the top) (Van Akkeren, J., 2016)
• Have clear organisational structure, written policies and procedures and fair employment practices (Reed, S., 2014)

Relevant Links:

Why Corporate Culture Matters in Fraud Control


Reference List:

Reed, S. (2014). Six Strategies for Fraud Prevention in your Business. Retrieved from http://www.cgteam.com/blog/six-strategies-for-fraud-prevention-in-your-business


Tan, D. T., Chapple, L., & Walsh, K. D. (2015). Corporate fraud culture: Re-examining the corporate governance and performance relation. Accounting and Finance, n/a. doi:10.1111/acfi.12156

Van Akkeren, J. (2016). AYB115 Governance, Fraud and Investigation: Week 9 [Lecture Notes]. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6300325-dt-content-rid-6147959_1/xid-6147959_1

Differential Association Theory, General Strain Theory and Cressey's Fraud Triangle

Cressey's Fraud Triangle should be of important knowledge within organisations to help prevent fraud, bribery and corruption. The fraud triangle (below) is a strong explanatory model to help understand why seemingly good people commit fraud (Mullen, Sinclair, Thomas, 2012). Two other major theories surrounding fraud occurrence are, differential association theory and general strain theory. The fraud triangle supports both of these theories as it encompasses elements that each theory represents.

(Van Akkeren, 2016)

Differential association theory is related to why fraud occurs by groups within an organisation. The collapse of Enron is an example of this theory as a group of executives came together to misappropriate financial statements and even colluded with their auditing firm, Arthur Andersen to commit financial statement fraud.

In contrast, general strain theory explains why individuals turn to fraud. The well-known case of Joel Barlow, can be applied to this theory. Joel Barlow was an individual and defrauded Queensland Health of millions due to personal strain. The following video is the creator of general strain explaining his theory:

To try and combat fraud, organisations need to eliminate one element of the triangle; for frauds to occur, all three elements of Cressey's fraud triangle need to be present (Cressey's Fraud Triangle - Part III: Rationalization, 2011). Fraud, bribery and corruption are increasing within organisations as there are weak internal controls (giving opportunity for fraud to be committed), employees feeling unfairly treated (making rationalization easy) and internal pressures such as layoffs within the firm (increasing potential financial burden). These three common problems within organisations are coincidentally the perfect recipe for fraud to occur according to Cressey’s fraud triangle. 

Relevant Links:

Cressey's Fraud Triangle

Differential Association Theory

General Strain Theory

Enron Collapse Overview

Joel Barlow Case

Reference List:

Cressey's Fraud Triangle - Part III: Rationalisation. (2011, August 23). [Web log Post]. Retrieved from https://learnaboutfraud.wordpress.com/2011/08/23/cressey%E2%80%99s-fraud-triangle-%E2%80%93-part-iii-rationalization/

Mullen, L. G., Sinclair, D. T., & Thomas, M. L. (2012). Interviewing the fraudsters. The CPA Journal, 82(2), 68. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/1010411795?pq-origsite=summon

Van Akkeren, J. (2016). AYB115 Governance, Fraud and Investigation: Week 7 [Lecture Notes]. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6292866-dt-content-rid-6037497_1/xid-6037497_1

Forensic Accountants and Interview Techniques

For forensic accountants conducting an investigation, following the strict guidelines set out by the courts is essential. Knowledge of and obeying by these guidelines is especially important when presenting evidence before the court, so that evidence, such as a confession fielded through an interview is not found to be inadmissible (Wegman, 2005, p. 1).

There are three major interview techniques for forensic accountants to understand and implement when interviewing suspects; REID technique, PEACE technique and motivational interviewing. Along with these techniques, forensic accountants should understand how they approach the interviewee is imperative for the evidence they gather to be admissible in court; using the humanitarian approach is proven to be effective (Van Akkeren, J., 2016).

I can relate to the humanitarian approach to an interview with my own experience of job interviews. One specific interview sticks in my mind as the interviewers were warm and built rapport. This made me feel more comfortable in giving them answers and helped easing me into the harder, more critical questions they had. I feel like this approach is in most cases the best option for interviewers to take. This approach will, like it did to me, make interviewees feel comfortable to open up to you, talk about what they know and possibly confess.

After considering my own experiences in an interview, some recommendations I would make to forensic accountants conducting interviews for their investigations include:

• being prepared as not to lose control and miss important information (McKinnon, I., 2015)
• being honest with the interviewee (McKinnon, I., 2015)
• have knowledge and understanding of laws within the state the interview is being conducted
• establish rapport; use the humanitarian approach (Van Akkeren, J., 2016)

Relevant Links:

REID Interview Technique

PEACE Interview Technique

Motivational Interviewing Technique

Humanitarian vs. Dominance in Police Interviews Study

References:

McKinnon, I. (2015). 9 Tips for Forensic Accountants Conducting an Interview. Retrieved from http://www.vincents.com.au/forensic-accounting/forensic-accounting-blog/article/9-tips-for-forensic-accountants-conducting-an-interview/295

Van Akkeren, J. (2016). AYB115 Governance, Fraud and Investigation: Week 8 [Lecture Notes]. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6296143-dt-content-rid-6090034_1/xid-6090034_1

• Wegman, J. (2005). Computer forensics: Admissibility of evidence in criminal cases. Journal of Legal, Ethical and Regulatory Issues, 8(1-2), 1. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/216236772?pq-origsite=summon

How Not to Remain Partisan as an Forensic Accountant Expert Witness?

Being called to present evidence at court as a forensic accountant requires you to only present opinion evidence. In presenting this evidence, forensic accountants must ensure they are not partisan. More specifically, when the written report is presented to the court there must be no suggestion you are acting as advocates for the party who you are working on behalf of (Hoffman, R. et al., 2013, pg. 46). 

I can relate to this from when I used to umpire junior netball games. When I was in the umpire position I had to act unbiased towards both teams when calling offences. If I did act unbiased towards a team I would of lost my position of umpire and would of not being able to umpire within that club again. 

If I was engaged as an expert forensic accountant, I would ensure that when I am preparing my expert report I gathered all evidence I believed relevant whether it was damaging to my client or not. If I believed evidence was being missed I would engage the lawyer to acquire more information (Hoffman, R. et al., 2013, pg. 46). Another important strategy when constructing the report would be to ensure that the report is understandable to non- accountants and that its conclusions are unbiased in doing so (Hoffman, R. et al., 2013, pg. 46). 

References:

Hoffman, R., Finney, W., Cox, P. & Cooper, K. (2013). An Accountant as an Expert Witness: A basic guide to forensic accounting (2nd ed.).

Forensic Accountants and the Regulatory Environment

The need for forensic accountants to keep up to date with changing regulatory environments is pertinent in their day to day duties as an expert witness in the courts. It is detrimental for them to be credible; by being credible you are aware, understanding of new regulations and able to apply these changes within their evidence they present in court. APES215 states that forensic accountants as expert witness' have a duty to the court (CPA, 2014), if evidence is not provided within these regulations, evidence presented in court will not be considered (Flexstudy, 2015).

Paragraphs 1.3 - 1.7 of the revised APES215, outline the mandatory knowledge for forensic accountants, in the way of understanding what knowledge of regulations they need to acquire before providing forensic accounting services (i.e. being an expert witness).

I can relate to the importance of staying up to date with laws and regulations even within my personal life. Mostly through my part time employment within an accounting firm. I have to apply my knowledge of regulations when doing clients tax returns so I remain within the taxation laws and that I am also claiming all possible deductions for my client's. 

References:

APESB. (2013). APES 215 Forensic Accounting Services. Retrieved from http://www.apesb.org.au/uploads/standards/apesb_standards/13092014103232p1.pdf

CPA Australia. (2014). APES 215: Forensic Accounting Services Fact Sheet. Retrieved from http://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/ethics/apes-215.pdf

Flexstudy. (2015). Forensic Accounting and the Expert Witness. Retrieved from http://www.flexstudy.com/catalog/schpdf.cfm?coursenum=95063

Vicarious Liability and Crime Within Business

The four major categories of crime in the business world include,

• white collar crime 
• organised crime 
• computer crime 
• regulatory offences (Australian Business Law, 2014)

These offences are conducted with the intention of financial gain and usually involve large amounts of money (Australian Business Law, 2014). Fraud and theft are characteristics of this type of crime and results in economic loss for the business and investors (Farlax Inc, 2016)

Vicarious liability was introduced into the Corporations Act 2001 (Cth) through the Statutes Law Amendment (Director's Liability) Act 2013; it was introduced to try and combat the above mentioned crimes within business. This amendment made it an offence if directors or others are personally involved in the commission of the offence or have aided, abetted, counselled or procured its commission by the corporation (Van Akkeren, J., 2016). Basically, if the fraud or theft has occurred against the company during the employee's recruitment by that company, management or directors of that company are liable. This law is important to avoid management 'looking the other way' or even worse, getting involved in a fraud. With this, they are personally liable, even if they had no idea of the fraud, they are forced to stay accountable. I would recommend to management and directors to implement a strict policy regarding fraud and theft and ensure the company's culture on fraud is not lax and is strictly enforced if a situation did occur. 

References:

Australian Business Law (33rd ed.). (2014). Retrieved from http://intelliconnect.wkasiapacific.com/scion/secure/ctx_TRUE/index.jsp?1461234193445=&uAppCtx=RWI&cpid=WKAP-TAL-IC&is_citator=false&link_type=1&document_id=abl14Uio456843sl13163899&cfu=WKAP#page[3]

Farlax, Inc. (2016). White Collar Crime. Retrieved from http://legal-dictionary.thefreedictionary.com/Business+Crime

Van Akkeren, J. (2016) AYB115 Governance, Fraud and Investigation: Week 5 [Lecture Notes]. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6282895-dt-content-rid-5915486_1/xid-5915486_1

Have IT Security Issues in Business been Minimised in 2016?

The need for security over IT within business is a necessity and over the years has become increasingly important as hackers and crackers are evolving and becoming more dangerous to businesses data and information. The COBIT 5 framework is a helpful framework to adopt when evaluating information security. Figure 1 shows the seven enablers of COBIT 5 that need to be considered and adapted into each business. 

Figure 1: COBIT 5 Enterprise Enablers. Adapted from "COBIT 5 A Business Framework for the Governance and Management of Enterprise IT" by ISACA, 2012, p. 27.

Even personally, I know that the need for addressing security is still a top priority as just last year (2015) my friend was targeted with ransom ware through an email regarding a parcel awaiting collection at Australia Post. They thought this email to be true as they actually were waiting for a parcel through Australia Post, so thinking they were doing the right thing they clicked on the link which in turn infected their computer. To gain access back to their files a ransom was demanded, they decided that the risk of not getting their files back was too high as they had no other backups anywhere so they paid the ransom. After this, the computer was unlocked, however, some of the files had been deleted anyway with no way of retrieving them. I witnessed the effects of this cyber attack and imagine it would be crushing for a business to be open to this type of attack on their files, proving that the need for addressing security has not been minimised in 2016.




References:

ISACA. (2012). COBIT 5 A Business Framework for the Governance and Management of Enterprise IT. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6236971-dt-content-rid-5743722_1/courses/AYB115_16se1/COBIT5-Framework-English.pdf

Should Management be Separated from Governance Policy-Making?

Separation between management of a company and the governance policy-makers of a company are essential in avoiding fraud, bribery and corruption; the highest risks associated seen with amalgamation of management and governance policy-makers. Good governance policies keep a company honest and if there were a break down of this separation, management will grow complacent and corrupt (Sun, L., 2016). 

According to the COBIT 5 framework;  a business framework for the governance and management of enterprise IT, principle 5 sets out the need for separation of management and governance policy-making. The COBIT 5 includes the following key areas for separation of governance and management as seen in figure 1 and should be adapted to each individual company (ISACA, 2012). The COBIT 5 Framework can be viewed through the link and should be reviewed to understand governance and management and how they should be adopted within business.  

Figure 1: Governance and Management Key Areas. Adapted from "COBIT 5 A Business Framework for the Governance and Management of Enterprise IT" by ISACA, 2012, p. 32.

Potential risks relating to not separating management and governance policy-makers is that management (also including lower level employees) are not kept accountable for their actions in making decisions; evaluations of how managers are undertaking business is an important factor of governance. A major example of bad separation of management and governance policy making is the collapse of Enron in 2001.

References:

ISACA. (2012). COBIT 5 A Business Framework for the Governance and Management of Enterprise IT. Retrieved from https://blackboard.qut.edu.au/bbcswebdav/pid-6236971-dt-content-rid-5743722_1/courses/AYB115_16se1/COBIT5-Framework-English.pdf

Sun, L. (2016). Why is Corporate Governance Important? Retrieved from http://www.businessdictionary.com/article/618/why-is-corporate-governance-important/