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Combating financial crime

by Jayanti Menches

Forensic Accounting
Chris Fordham
Principal
Forensic/investigative services
Deloitte Touche Tohmatsu

With a dramatic global increase in bankruptcies, insolvencies, corporate fraud and money laundering cases, reconstructing the history of a transaction and determining the facts is of paramount importance. Accounting firms are responding to the need for what is known as forensic accounting by combining traditional disciplines such as the audit, review and compilation of financial statements with investigative skills.

Tools of the trade

Working in this business is almost like being a private investigator, explains Chris Fordham, principal, forensic/investigative services at Deloitte Touche Tohmatsu (DTT). His team of forensic accountants and law enforcement experts undertake investigations, business intelligence, fraud management and computer forensics, as well as expert witness and litigation support assignments.

Investigations can take the shape of asset searches and recovery or the tracking of an international fraud. Business intelligence, however, provides strategic information on individuals and companies as well as the critical checks necessary for organisations before making business decisions - especially in overseas jurisdictions.

Meanwhile, fraud management encourages organisations to establish appropriate systems, controls and procedures to prevent and/or detect illegal acts and thereby ensure a better chance of recovering any losses. As Mr Fordham points out, "We help our global clients prevent fraud. Getting embroiled in a money laundering or terrorist financing scandal would be very embarrassing [for corporations]."


"Soft skills are required, [plus] an inquisitive mind and an ability to think, communicate and express opinions"

Finally, computer forensics enables specialists to use information technology to recover information from computer hard drives and trace any unauthorised access or other unlawful activities.

DTT's forensic services also provide expert witnesses in court or arbitration cases. They deliver expert testimony on the evaluation of claims, estimate the loss or damage suffered in a dispute and evaluate businesses and shares. Additionally, general litigation support services are provided for dispute resolution. "We may act as shadow experts, providing ammunition to the client's legal advisers behind the scenes," he explains.

Building the case

Leading DTT's forensic and investigative services group in Hong Kong and mainland China since 2002, Mr Fordham launched his career in 1990 within the insolvency division of a large multinational accounting practice in the United Kingdom after completing his 'A' levels. Moving to Hong Kong in 1998, he worked for a local accountancy firm, establishing its litigation support practice and overseeing various investigations and expert witness and litigation support engagements.

Asked if the lack of a university degree has hindered his progress, he replies that his success has much to do with on-the-job training and earning relevant professional qualifications. Successfully completing an insolvency qualification at his first placement helped him enhance career opportunities and gain valuable experience.

He adds that working for a large company offers many benefits, such as tremendous professional development and training resources and encouragement to earn qualifications. He is currently affiliated with the Association of Chartered Certified Accountants, the Association of Business Recovery Professionals, the Insolvency Practitioners Association, the Academy of Experts, the Hong Kong Society of Accountants and the Association of Certified Fraud Examiners.

Background check

Finding a forensic accounting specialist is not always easy, he adds. DTT prefers people with investigative accounting or law enforcement backgrounds or, preferably, both. Language skills are also very important, including written and spoken English, Cantonese and Putonghua.

To succeed in the field of forensic investigations, "Soft skills are required, [plus] an inquisitive mind and an ability to think, communicate and express opinions."

Although a junior accountant is not expected to have as much experience, a candidate needs to work hard, be a team player, 'street- wise' and inquisitive, IT-literate and able to handle research, he continues. Furthermore, a university degree is useful and viewed favourably.

When it comes to managers, DTT's forensic services look for people with forensic accounting or law enforcement backgrounds. Accountants with due diligence or insolvency experience also fit the bill.

China Opportunities

Mr Fordham notes that both foreign corporations looking to invest in mainland China and mainland Chinese firms considering investment outside want to learn more about the people with whom they are about to do business. The mainland also recently passed new civil evidence rules and announced new anti-money laundering rules, both of which will materially affect the amount of forensic work required.

In his opinion, the forensic services market is growing in mainland China and DTT itself is looking to expand its forensic services throughout the region. Although it has people on the ground who can initially respond to any forensic investigation, depending on the circumstances, staff from Hong Kong may need to be brought in to handle cases.


 

Taken from Career Times 28 March 2003, p. 30

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