Conducting internal investigations in a remote environment
INSIGHT ARTICLE |
There is no question that the COVID-19 pandemic has posed unique challenges for internal investigation teams, including in-house investigators, external counsel and forensic accountants. Typical processes around preserving evidence, gathering data and documents, interviewing witnesses, and presenting findings have all been affected by stay-at-home orders, travel restrictions and social distancing. Despite these restrictions and limitations, however, internal investigation teams can still conduct their work through means other than traditional in-person approaches, while maintaining the same level of confidentiality, effectiveness and diligence.
This article provides practical steps for conducting an internal fraud investigation in a pandemic environment.
The realities of COVID-19 do not change the fact that the issues that led to the need for an investigation still exist. Regardless of whether the investigation is in the initial planning stages or near completion, the investigation team should reexamine the scope and work plan to assess whether procedures can be completed efficiently and effectively in a remote environment, while maintaining confidentiality and complying with applicable rules and laws. Internal investigations are time sensitive, and delays or postponement can have negative consequences for the business, shareholders or parties involved in the complaint. The risks include:
- The company may be exposed to legal, regulatory, financial, operational or reputational risks.
- The investigation team’s ability to access potentially relevant key data, documents and information may be compromised. For example, documentary or electronic evidence may be tampered with if it is not collected in a timely manner, or may be inadvertently deleted, destroyed or archived as part of normal business operations.
- Access to key individuals knowledgeable of facts and circumstances may be obstructed due to employee turnover, layoffs, retirement, etc. In addition, witness memories may deteriorate or change over time, thereby affecting the accuracy and reliability of statements.
- The company could be hindered from remediating and implementing corrective action.
Recognizing these risks, the investigation team should work with company stakeholders to move the process forward by performing an initial review of the allegations, and then prioritizing next steps based on the significance of the underlying concerns and the ability to perform the work without physical access.
As with any internal investigation, all protocols and procedures should be defined and documented in a work plan, including any changes made to the scope, procedures, workflow and timeline. Furthermore, internal investigations invariably involve interactions with company leadership and personnel, such as legal, compliance, finance, accounting and human resources; accordingly, any adjustments to the investigation scope or workflow should include input from key company stakeholders, such as directors, officers and board committees, to ensure that there is transparency and cooperation from management.
Restrictions on travel and access to corporate facilities and personnel can affect the investigation team’s ability to collect all relevant documents and data in a cost-effective and timely manner. For example, investigation teams may not have the ability perform in-person document inspections to review and flag relevant documents. Due to stay-at-home orders, company staff and employees may not be available to respond to document requests, thereby causing unplanned delays. As such, document collection planning and scoping is critical. Best practices for document collection in a remote environment include the following:
- Develop a comprehensive custodian and data map outlining the location and accessibility of physical and electronic documents and data. Considerations also need to be made to secure data on devices that may be spread out geographically. In addition, data that may reside on personal laptops and electronic devices used by employees working from home must be secured.
- The investigation team should review the company’s document retention policy and confirm that document hold notifications have been issued to all relevant employees, contractors and third parties to ensure relevant hard copy documents and electronically stored information are preserved.
- Conduct custodial interviews as soon as possible to determine where relevant documents are stored. If the company is considering personnel cuts, conduct those interviews promptly to avoid losing access to individuals with key knowledge.
- Establish secure protocols for the handling and transmittal of information and evidence, as well as privileged material.
- If collecting hard copy documents cannot be done safely, the investigation team should consider sequestering the documents in a safe location for storage, to be scanned at a later date.
Witness interviews are a critical part of the investigative process. While in-person interviews are certainly preferable, due to COVID-19 they may not be possible. Therefore, investigation teams need to consider other alternatives, such as videoconferencing interviews. The challenges of remote witness interviews include unavailability of witnesses due to furloughed or reduced work schedules, difficulties in evaluating witness demeanor and credibility, and the inability for the interviewer to control the remote interview environment, e.g., the witness may decide to drop off to avoid responding to questions.
Despite these challenges, it is possible for the investigation team to mitigate these challenges without delaying the internal investigation. With adequate planning, preparation and coordination, remote interviews offer a cost-effective, efficient and safe way to conduct interviews during the COVID-19 pandemic. Remote witness interview best practices are as follows:
- Videoconference interviews are preferable to those conducted via telephone, as they provide many of the benefits of in-person interviews, such as being able to observe the witness’s demeanor and establish a rapport with the witness. Videoconferencing also allows for sharing of documents using screen-sharing tools.
- If the internal investigation is being conducted at the direction of counsel, nonattorneys such as forensic accountants must act under the direction and instruction of in-house or outside legal counsel to preserve the attorney-client privilege. When in doubt, have an attorney present on the videoconference so that the appropriate qualifier and disclaimers (e.g., Upjohn warnings) are properly communicated.
- Coordinate with the investigation team to limit the number of participants so that the witness does not feel intimidated. If possible, the interviewer should have a team member to take notes and confirm witness statements.
- Establish the formality of the interview. Inform the witness in advance that the interview will be conducted by videoconference and confirm that the witness has all of the necessary hardware (e.g., computer camera) and access to an internet connection. Request that the witness find a quiet and private setting for the interview.
- Establish the ground rules at the onset of the interview, such as agreeing which individuals will be present during the interview. Other considerations include pre-arrangement of breaks, but not while a question is pending. Lastly, establish an alternative means of communication in case of technology issues.
- Prepare an outline or list of questions in advance, but be prepared to pivot. Prepare exhibits beforehand and have a plan for sharing documents. It may be more efficient to share documents in advance of the interview via email, but considerations should be made as to whether the documents should be password protected. As always, be mindful of employment law and data privacy risks before questioning the witness about documents.
Despite the challenges imposed by COVID-19, the key principles of internal investigations remain the same. By understanding the challenges created by remote investigations—and developing practical strategies to combat those impediments—investigation teams can effectively complete remote investigations and ensure the credibility, transparency and reliability of the investigation process.