Several small investors faced losses when a larger business failed, causing several beneficiaries of the firm to face losses. What comes as a perplexity is the fact that the firm was showing all the prospects and potential for development. This is a fact that merits investigation without the shadow of a doubt. In a scenario such as the one provided, one of the first steps will be the conducting of interviews with the accounts and finance operatives of the firm. This will allow for a statement to be obtained about the nature of the accounts of the firm and the modus operandi that the firms accounting procedures follow.
Needless to say, the interviews are to simply gather statements and any information that can be accumulated in the process and shall not be carried out with an intention to extract any confessions or declarations of guilt. The entire staff and any personnel associated with the finance and accounting operations of the firm shall be interviewed and their perspective on the present book keeping and reporting operations and the suggested book keeping and reporting operations shall be recorded.
It is essential to note that a hypothesis shall be formed during the interviews that shall point towards the suspect and quantitative figures shall be formulated with regard to the possible degree of intervention by each suspect individual and/department that contributed to the irregularities that spurred the investigation to begin with. The statements gathered during these stages can be then used as a tool to perform cross checks of the evidence found in the financial reports of the firm.
Amongst the most significant advantages of an interview is the fact that it begins to cause waves in the firm and the culprits begin to take measures to cover up their tracks by either attempting to destroy the relevant documents that can be used in cross checks or tampering with them. Once the interviews have been completed and the statements have been taken, two analyses shall be performed. The first analysis shall be one to find any discrepancies amongst the recorded statements to find any irregularities in any area of the accounting operations of the firm.
The second analysis will be of the books and will attempt to scrutinize whether or not the operations have been carried out in the manner that is the fundamental modus operandi of the firms accounting practices. An aspect of the investigation that deserves to be highlighted at this point is that cases such as these are not entirely new and there have been numerous other recorded cases where a firm has shown extremely high and accelerating profits but has suddenly plummeted.
An incident such as this was also observed in 1996 when Orinda-Moraga Disposal Services of the Contra Costa County in California showed inflated figures and manipulated outflows to siphon money out of the firm and into illegal accounts. In light of incidents such as these, it would also be logical to determine the degree of authenticity that pertains to the outflows of the firm.