Internal audits serve to provide independent assurance that a company’s risk management, governance and control processes are operating effectively, and address issues that are fundamentally important to the survival and prosperity of the organization.  For example, internal auditors often look beyond financial information and consider broader issues such as the company’s reputation, competitive landscape, environmental impact and employee morale.

Internal investigations allow a company to monitor itself to determine whether its stakeholders, employees, and vendors comply with the law as well as internal policies and standards.  The purpose of an investigation is to gather facts so that decision-makers can make a credible determination about what happened and whether a violation occurred.

Unlike with internal audits, the objectives and results of internal investigations are not widely shared throughout an organization.  Therefore, investigations require highly-trained street-smart professionals and skilled interviewers with the ability to help reticent witnesses discreetly disclose information of interest concerning specific allegations or suspected misconduct.

Internal investigations also tend to rely extensively on witness testimony in addition to data analysis and public record searches. When interviewing witnesses during an investigation, absolute confidentiality should not be promised but reasonable efforts should be made to limit disclosure.  Because investigations are often unpredictable, evidence with probative value may present itself at varying times, so investigators should be flexible in order to re-evaluate previously planned courses of action.  Given these and other complexities, investigations can take longer to perform than internal audits, but can prove to be more cost-effective over time, especially if recoveries are sought.

When performing investigative procedures, it is important to do so with a sense of urgency.  However, rushing too quickly to confront potential subjects or targets without having acquired the appropriate evidence will likely drive up investigative costs and yield less-than-remarkable results.  Since great emphasis is placed on properly documenting the results of investigations, as well as on maintaining the appropriate chain of custody with respect to evidence, the manner in which evidence is obtained and preserved is also critically important.

Organizations in various industries are constantly faced with defending or investigating a variety of allegations, claims and related challenges. Mercadien’s forensic and litigation support team has extensive experience working closely with executives and counsel on a variety of internal audits and investigations, which allows us to discreetly and expeditiously uncover the facts and recommend remedial actions. If you need to make a decision about conducting an internal audit or investigation, please contact me at fpina@mercadien.com or 609-689-9700 for help addressing your concerns.