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A disproportionately large part of the regulators budget is taken up by fraud. Large and complex fraud cases can involve many thousands of pages of bank statements and other records that need to be presented and argued over in court. The complexity may present a lack of clarity which can be exploited by the criminal defence.
The adversarial system of justice means that any criminal has the right to present a defence to allegations made. He or she is presumed innocent until proven otherwise. The system is possibly the best and fairest possible, but does have its own faults. Having a fair trial is right, and means that every aspect of a case must be carefully examined and cannot be simply skirted over. Of course this means that the criminal defence team can exploit the system to their advantage.
In order to ensure that complicated financial matters are easily understood by the court it is essential that relevant evidence of fraud is examined by a competent fraud expert witness or forensic accountant and presented clearly and succinctly. Ideally, this would happen during the preparation of the case, by the body investigating the criminal matter, such as the police. The trouble is that such persons are usually not employed by the police often because of budgetary constraints. They will investigate a case of fraud and often present every single item of financial evidence they have examined regardless of whether it links together and describes the activity that has taken place.
This means that the defence will have to employ an experienced forensic accountant to trawl through every aspect of the case and potentially act as a fraud expert witness during the trial. The money that the police saved from their budget will have to come out of the criminal prosecution services budget for defence costs! Not only that, but when the defence expert witness presents a report that criticises the way the prosecution have presented their case, the police will then be forced to seek their own experienced expert witness to consider it. Thus the costs that they saved in the first place need to be incurred after all.
Serious fraud trials tend to be the most expensive, and there have been many failures in the past costing millions in tax payers' money. One solution would be for the investigating authorities to employ the services of a forensic accountant at some pointy during the preparation of their case. The forensic accountant would test various aspects of the case and advise on areas of weakness and lack of financial audit trail. Employed in a better way, such costs should not be as great as for a full-blown expert accountant's investigation. The great benefit would be that when the defence were faced with the case summary, there would not be the same scope for criticism using their own expert witness.
The defence expert would therefore be restricted to verifying the approach used by the prosecution, and potentially simply auditing aspects of the case rather than doing his own full-scale investigation. In addition, the amount of relevant documentation that needs disclosing might be reduced substantially.
A further benefit is that both the prosecution and defence experts could meet. In a very short space of time they could reach a point where most areas are agreed, leaving just a few points to argue over in court. These remaining points are most likely to be the ones where legal argument is needed, rather than expert financial analysis.
Expert forensic accountants are needed in complex cases of fraud so that the evidence can be understood by the court - these being not accountancy trained. However, their use can be expensive and add to the already massive costs needed to run the criminal justice system. More use early on, spread evenly between the prosecution and the defence, might result in lower costs and better outcomes.
Mark Jenner specialises in accounting expert witness cases. He is a Fellow of the Institute of Chartered Accountants, a Member of the Expert Witness Institute, a Certified Fraud Examiner and has a Masters Degree in Fraud Management. He is an expert fraud investigation professional.
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