Sue's Blog

Sunday, September 10, 2017

Dear Premier - do you see the red flags? Forensic Audit

A forensic audit is the process of reviewing a person's or company's financial statements to determine if they are accurate and lawful.
Forensic audits are used wherever an entity's finances or operations present a legal concern.

Forensic audits are performed by a class of professionals with skill-sets in both criminology and accounting who specialize in following a money trail, keeping track of fraudulent and actual balance sheets and checking for inaccuracies in overall and detailed reports of income or expenditures. If they find discrepancies, it may be the auditor's job to investigate and determine the reason for it, or it may be the job of a separate financial investigator.

Red Flags for fraudulent or questionable activity. 


Unexplained variances between budgets and actual balances.
Significant internal control issues.
Unusual write-offs or unordinary transactions.

Infrequent or late financial reports and reviews.

(Scapegoating) Where people are given a title but without actual responsibility, it can effectively cover up what is going on with those who do have responsibility or power in a situation.
The weakening or elimination of a watchdog (such as PUB) for the Corporation.
Staff whispers and rumors “that all is not right".

Budget for a project escalates on a recurring basis.
Contracting an outside accounting firm to validate specific things but not all things. 

 A major indicator can be the act of deletion or pressure on staff to delete, remove or otherwise dump past records or conceal past reports following a senior management change. 
Falsified estimates, reports, or projections. 
There are any significant conflicts of interest present with senior executive and/or outside contracts/tors. In the case of a Crown Corporation - if any potential conflict of interest is or may be present with an elected official in Government. 

Employing any external consultants or contracting firms who have been found guilty of fraud, bribery, or embezzlement in the past.  
Any corporation that deliberately withholds information from its shareholders.
Questionable payouts or bonuses to Senior Executive where performance does not match results. (happened with Enron)
Be particularly concerned by any corporation that refuses to do an immediate forensic audit - when several warning signs are present. 
In conclusion - I add to all MHA's - ignorance is no excuse when it comes to the law. 
Whistle-blowers needed for Muskrat Falls. Send me a message. 


1 comment:

Anonymous said...

Pardon my ignorance of politics, but is there a standard of education required for such tremendously important roles in our government both municipal and provincial? There is a learning curve in all jobs, including political, and workshops offered to help newbies gain an understanding of the roles in government but we seem to have people appointed to high profile positions who are ill prepared or learned to carry out the duties expected of them. And shouldn't there be a follow-up after so many months??? regarding how the person is doing? A financial audit on Muskrat Falls is long overdue and the brakes ought to be pulled immediately until the audit is completed and results presented to the public et al. Likewise, we have municipal elections coming up and some communities are not bothering with an election but unanimously voting in the same people from last election. We maintain the status quo but is this a good thing when we have individuals who are often unprofessional and ill equipped to take the concerns of residents to the higher echelons of provincial and municipal government. Someone is quoted as having said "when we know better, we must do better" and we do know better so let's get on with it.