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Fraud and Investigations - Ernst & Young - United States

Fraud and investigations

Every fraud attacks your company's integrity — from white-collar crime and securities fraud to employee theft and deception. So when questions arise, we help you find answers.

Fraud and corruption are facts of business life. Studies show that global businesses can lose up to 6% of revenues to fraud. That’s a massive number. Throughout the world, whitecollar crime has become a lightning rod for governments, regulators, shareholders and the public. You have to be vigilant. You must have effective ways to safeguard the security and integrity of your enterprise and its value. And you have to investigate allegations of potential misconduct.

Uncover the facts. Perhaps you’re responding to a regulatory inquiry or seeking answers to stakeholder questions or whistleblower allegations. Perhaps you have concerns about unusual patterns of financial activity or you want to review financial reports that have been called into question. Our Fraud Investigation & Dispute Services practice can help make a difference.

Experienced in forensic accounting, financial and securities regulation, electronic discovery and risk management, our multidisciplinary professionals investigate situations where you suspect you have a problem. We understand your need for sensitive and timecritical corporate investigations.

Develop expert solutions. Working with you or your outside counsel, we can help determine what happened, how much is at risk, who is involved, and what opportunities exist for recovery. Through a fraud risk assessment, we can help you identify your most significant risk areas so they can be better managed and mitigated. We can help you:

  • Investigate financial reporting and securities fraud
  • Examine financial and source documents for fraud—including false reporting, manipulated records, forgery, or electronic tampering
  • Look into alleged fraud or illegal acts, including money laundering, gray market activity, embezzlement, and corrupt acts that violate local law
  • Structure regulatory compliance strategies
  • Provide expert reports and testimony
  • Conduct insolvency and bankruptcy fraud investigations
  • Manage health care compliance reviews
  • Analyze suspect vendor relationships or activities
  • Probe suspect financial performance by a unit, subsidiary, or joint venture
  • Explore compromises of intellectual property and trade secrets

Case studies

We have experience investigating accounting fraud, employee theft and misconduct, financial crime and other suspect activity.

Financial statement investigation. We were engaged by outside counsel to the audit committee to conduct an independent investigation into potential earnings management and accounting fraud. The work involved simultaneous activity over a four-month period in the US and in more than 30 countries in Europe, Asia and Latin America. The company used our findings to restate its financial statements over a five-year period.

Pharmaceutical industry compliance reviews. One of the world’s largest pharmaceutical companies asked us to review its controls related to its selling and governance practices. The company wanted to see if its operations in various countries were complying with the standard code of sales and marketing practices and adapting it to form a local code that also complied with national laws and regulations. Our professionals reviewed practices in 20 countries.

Foreign corrupt practices act. The US head office of a technology supplier engaged us to investigate its compliance with the Foreign Corrupt Practices Act within its subsidiaries. Our investigation revealed that the gifts were provided to government officials and that there was a lack of proper authorization for exceptionally high commission rates given to certain distributors. Moreover, the company’s accounting records served to hide the extent of the gifts. Our investigation enabled the client to identify and quantify its risk exposure. We also provided recommendations to the client on improving its control system.

International investigation. We conducted an investigation into alleged misappropriation of funds during the United Nations’ Oil-for-Food program on behalf of the Republic of Iraq. We investigated allegations that included kick-back schemes, bribery and political influence, improper bidding procedures, inconsistent or failed delivery of purchased goods and improper oil pricing schemes.

Financial restatement. Pending completion of an independent review, we were retained by new management of an international telecommunications company to perform extensive procedures to assist with the restatement process. A multinational team was involved in the engagement and services were provided in Europe, Asia and North America. We helped management respond to specific requests related to the restatement from the board of directors, the independent reviewer and multiple regulators. We also helped management to identify the full scope of the issues, implement controls to compensate for deficiencies, implement a remedial measures program and provide additional financial resource capacity.

Regulatory investigation. We were retained by a law firm on behalf of a large financial institution to assist with its response to a special examination of its accounting policies and practices by its principal regulatory agency. Our work continued for more than two years. The company’s CEO and CFO were replaced, and the subsequent restatement totaled more than $10 billion.

Thoughts from a former federal prosecutor
Find out what prosecutors think about while conducting an investigation and what strategies they employ (pdf, 106.65 kb).

Detecting financial statement fraud
Learm more about how fraud happens, common fraud schemes and what managers can do to identify and mitigate fraud risks.

Acquisitions in emerging markets
Developing nations promise buoyant growth for companies, but investors still face many risks. Know the risks and how to address them (pdf, 110.1kb).

Staying ahead of corruption liabilities
Find out how a detailed FCPA due-diligence process can help avoid potential pitfalls in high-risk market transactions.

Learn more about our Foreign Corrupt Practices Act (FCPA)services

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