The Reserve Bank of India (RBI) reported bank frauds amounting to ₹1.38 trillion in 2021. While there are no official figures for losses due to frauds (in organisations), the current spurt in forensic engagement is indicative of a significant increase in fraud incidents. The Covid-19 pandemic, along with its disruptions, has accelerated the adoption of various technologies by organisations. Many were focused on developing cyber and data security strategies and risks where, other than specific areas of spend management, fraud, waste, and abuse controls may have taken a back seat.
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Contingency spends on computers and other support for employees working from home may not have gone through the standard procurement processes. There could have been data leaks, including those of business secrets, intellectual property, and customer details. Cyber criminals had the opportunity of a lifetime to prey on the chaos that prevailed. However,
The future is here and we need to adapt.
4 stages to forensic audit
Forensic audit/investigation typically consists of four stages. The first stage is discovery, followed by analysis, validation, and finally reporting. While each of the stages has its own subscript, any forensic audit/investigation would progress in this sequence.
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When we talk about discovery, several technological accelerators are available today. Most are now cloud-enabled, allowing customisation based on the size and complexity of data. For structured data, in addition to Big Data, Machine Learning (ML), and Artificial Intelligence (AI), process mining is fast emerging as a deviation identification solution.
For unstructured data, comprising emails, text messages, office-created files, social media chatter, and other documents that do not follow a particular pattern, some leading eDiscovery companies have upped their capabilities and cloud presence to efficiently process vast volumes of such data and find the proverbial needle in a haystack . This includes use of AI and technology-aided reviews. The recent launch of RelativityOne in India is a step towards bringing a platform such as this to the country while making it possible for the data to remain on a cloud that is within the jurisdictional boundaries of the country.
Other tools and technologies supporting this include using AI-based voice assessments to find potential risks and selective samples of exploited vulnerabilities, technology-driven and low-contact employee background verification, and enhanced checks on data leaks due to employee attrition.
Analysis, in addition to discovery
Many platforms also permit analyses in addition to discovery. The discovery stage enables the identification of potential fraud indicators, while the analysis stage focuses on creating a supporting hypotheses. By supporting and enhancing the effectiveness of forensic investigators through advanced visualisation, such tools and technologies enable quicker validation, which is often through interviews, management discussions, etc. At this stage, due to social distancing, many such interactions are hosted on online platforms such as Zoom, WebEx, Microsoft Teams, etc., with recording facilities; however, we expect that there would be more advancements in this space as well, considering that several legal matters are also being heard through such platforms.
Technology advancements will result in forensic audits/investigations adapting and changing with the way businesses are operated. The challenge for businesses, forensic professionals, and the legal community will be to adapt these changes to the legal framework. With an eye on this, many forensic technology platform providers are also putting in more effort to create audit trails and process defensibility on their platforms.
The author is Partner, Financial Advisory, Deloitte India