‘Highway to hell’ for forensics and investigative auditors in Africa

September 14, 2013

Experts define forensic audit in different perspectives and largely depend on level of competency. Audit means assessing the compliance against a certain standard and forensic audit is a problem-based process compared to rule-based one like financial auditing. In the jargon of accounting world, financial audit is a process of verifying an entity’s financial statements to express an opinion that is intended to provide reasonable assurance that the statements are presented fairly in all material respects according to the existing financial reporting framework. In simpler terms, forensic auditing is the accounting skills and extensive relevant knowhow to unresolved issues within the rules of hardcore evidence. Compared to the ordinary financial audit, forensic auditing lacks acceptable rules used in their work processes. Generally, a fraud audit is an expensive process that requires enormous time and dedication of staff time. Fraud auditors aim is to see the entire data population when proving or disproving allegations, simply because using samples means that there is a risk that fraud exists in transactions whose data are not sampled. After understanding the work of forensic auditors, it is therefore very unfortunate to see a damning allegations implicate some well known African countries forensic auditors for presenting their investigation report in various African courts as expert witness and at the same time being allowed by rogue courts to make opinions on matters that are not within their expertise, including but not limited to legal opinions.

For example, for police to identify crackers, they need to trace the connection between the data hacked from the computer system and its links with affected companies and with their inadequate skills, the police will need to hire services of the forensic auditors. Releasing of digital forensic investigation of electronic transactions takes time and in some cases there has been reports of malpractice and compromised auditors. Because of corruption and intimidations by powerful crooks, it is unwritten rule in Africa auditing industry not to make public the findings of the investigation due to what is always termed as various issues like legal issues, because some fraud investigators normally use materials obtained illegally through hacking and unauthorized access of data for alleged perpetrators. Research in Africa has shown that even members of the public outside accounting industry are a confused lot who barely differentiate the forensic experts. This is primarily due to the fact that fraud cases in Africa can be very different depending on the country. This help explain the fact that the auditors call themselves different names, such as fraud auditor, fraud examiner, financial forensics expert among many other dud titles. The forensic audit is very adaptive and flexible in terms of methods and techniques depending on the issues that need to be solved.

On the other hand, the challenge of the process lies within the fact that it can be difficult to measure the quality of the works performed by the auditors.

In various African countries, auditors have been discredited as a bunch of parasites focused on enriching themselves by conniving with corrupt cartels and corporations. Studies indicates that this happens because most auditors and auditing firms say in their reports facts only supported by evidence presented in a systematic way so as to enable judges who read the reports to draw their own conclusions whether fraud has occurred and who the perpetrator might be. If the victims are empty pockets and the perpetrator is a deep pockets mafia, then corrupt judges end up eroding credible auditors work by discharging their verdict incompetently. Undoubtedly, outcomes of a forensic audit are unpredictable like a game of poker. In cases well known in the public limelight, forensic auditors have unearthed multiple fraud cases in government agencies and even organizations and the payback for auditors is those reports to gather dust in shelves of decision makers and law enforcement agencies. In cases where allegations of fraud are unsubstantiated they receive enormous support from the high and mighty a situation that lead to most Africans to believe that auditors work was a public gimmick. Based on common practices fraud audit processes is started by the establishment of a sufficient predication based on preliminary pointers that fraud may have occurred.

A relative of mine working as a federal government forensic investigator whom I sought his views on this subject, informed me that preliminary evidence gathering is conducted continuously by a formulation of “hypotheses” which are basically a set of predetermined questions aimed to be answered by the audit. He shared with me how without clear “hypotheses”, a case he was handling in 2011 would have collapsed and entire course of the investigation would have lost focus and resources resulting in wastages without bringing the desired results. In my relative own words, he then tests his “hypotheses” by collecting further data and information through means such document analysis, investigative interviews and direct observations. 
A key to success to him in this stage has been to maintain his alleged offenders settings and to ensure the problems involving alleged offenders like manipulating evidence and disappearing will not occur. Research in France, Canada, United States and United Kingdom shows that it is important to maintain offender’s natural setting and it is important for a forensic auditors to be time efficient as possible to diminish offender opportunities to dispose of or tamper with evidence.

The use of best practices as a reference in planning and executing a successful forensic audit, it is worthy noting that auditors must consider relevance. In the case of forensic audits in many African states, it is essential for forensic audit experts to sit together and formulate the most appropriate best practice to be used as a guideline in the continent that continues to grapple with rampant corruption. This is vital because although African auditors always refer to western world benchmarks and best practice in performing forensic audits, the nature of the process also means that such guidelines are formulated based on the most common problems involving fraud in each Africa’s individual country. Although fraud is a menacing problem everywhere, despite some similarities trends often vary in African countries, as do investigation methods. An investigation method that works well in one let say South Africa or Uganda may lose its effectiveness in Tanzania or Ghana. Fraud auditors in Africa need to embrace the developed countries standards and keep in mind that it is bad to start an investigation based on prejudice as was reported in damning report. It is important for fraud auditors in African countries not to have preconceptions about who is guilty and who is not before starting an investigation is conducted and concluded as per the standards of forensic investigations.

Eight years ago I was involved in a software project that involved developing advanced forensic software and the lead developer was 4o something bloke from Canberra who currently work as a forensic auditor with an auditing firm in Brisbane. In the course of that project, I learned that audits are all about facts and evidence. It was clear auditors can formulate investigative questions that may lead to the formulation of investigative hypotheses, how to test them and to keep them on the right path. For now when it comes to fraud audit in Africa, expect the unexpected but also hope for the best and prepare yourself for the worst. Unfortunately for fraud auditors, the public in African countries is seeing fraud audits as some kind of white elephants processes that involve half-baked and greedy auditors that focuses in uncovering fraud without sharing the outcomes. In conclusion, despite the challenges, a fraud audit is an essential part of combating fraud in Africa and should be supported by everyone. Fraud auditors with a thorough understanding on how a fraud audit should be conducted should stand at the forefront of the continent’s battle against corruption and thriving white-collar crimes. The sad thing is that there are few fraud audit professionals are available across Africa compared to the number of fraud cases happening on daily basis in the continent of 1 billion people. With more fraud auditors working for the private and public sectors, African countries need to derive a more robust way of eradicating fraud otherwise just my favorite rock band ACDC song highway to hell goes the auditing industry is headed to hell.

Contador Harrison