Sometimes paper and digital records aren’t enough to prove a crime was committed. White collar crime requires people with interview knowledge, people with forensic accounting knowledge, people with knowledge of bureaucratic structure and other possibly scientific knowledge pertinent to the private or public entity is needed. It’s not like possession of so much narcotics equals so much prison sentence.
2 Coatesville investigated by BDO
This case is about Coatesville school district in Chester County. Accounting firm BDO (2014) investigated the Coatesville school district where two directors where suspected of fraud in the athletic department. The scope of their report is specifically limited to the application of forensic accounting procedures. As might be expected from an internal investigation conducted by an accounting firm, investigators filled the investigation report with numbers and charts. Obviously, investigators applied their forensic accounting knowledge in this investigation. While others had already revealed the fraud in the Acar case, this investigation started at an earlier stage where there was only suspicion of fraud. From a contingent perspective, forensic accounting knowledge was thus much more important in the Coatesville investigation than in the Acar investigation.
By means of numbers, BDO (2014) tried to make a case of surprisingly low athletic department revenues and surprisingly high athletic department expenses. These surprises created suspicions of fraud directed at the superintendent Richard Como and former athletic director James Donato. If investigators had applied legal knowledge in this investigation, they would probably have looked more at organizational structure and authorities of both Como and Donato. If investigators had applied behavioral and interview knowledge, they might have succeeded in reconstructing the past by getting Como and Donato to tell them what really went on in terms of revenue collection and expenditures.
The core message from all cases is that a contingent knowledge management approach is needed in internal investigations. The situation should determine what kind of knowledge to apply in a specific investigative challenge. Legal knowledge seems to dominate many investigations, where forensic accounting knowledge and management consulting knowledge might have been more appropriate.
Forensic accounting knowledge, business knowledge and detective knowledge is often more appropriate for the purpose of reconstructing the past. The application of legal knowledge can easily result in a report of investigation focusing on formal procedures and bureaucratic improvements.
Table 2 presents a comparison of the cases discussed from a knowledge management perspective. The table lists knowledge applied versus knowledge needed. It comes as no surprise that law firms as investigators mainly apply legal knowledge independent of critical issues at hand in the investigation. Similarly, auditing firms apply mainly auditing knowledge independent of critical issues in the investigation.