Business Investigation is regarded as an in detail investigation of an organization or the company where its business is confide by a willful violation that is performed by the third parties, its employees etc.
They dig deep to determine if a potential business partner is legitimate, try to uncover any fraud or embezzlement going on, and check out if a potential business merger will be beneficial. They can also cover criminal inquiries, intellectual property investigation, and financial searches.
What is a Business Investigation?
The Business that allocate different types of resources to get an exceptional information that will help one to get the desired results. Business Investigation is generally conducted to analyze the potential risks and frauds that take place as a whole. Therefore, by performing the investigation, the business will forbid the upcoming risks that are taking place as well as to curb the loss affected through the fraudulent actions.
Moreover, there are different facet that are developed regarding the Business Investigation that are basically developed on the organization’s or companies needs as a whole.
Understanding the Types of Business Investigation
According to what you are exactly conducting the investigation within your organization or company, the investigator administers on the different type of investigation. Following are the types of Business Investigation:
- Research InvestigationThe Research Investigation plays a major role in the Business Investigation Process. There are different investigators who are appointed to do research for finding the in detailed information of the organization or company with which the merger, acquisition is going to take place. The investigators also carry on in depth employee background check of the organization or company.
- Undercover Investigation
As and when the investigators mingle with the organization or company, the investigator can find that if any employee has done any wrongdoing like theft, harassment etc. They will start conducting secret surveillance as a part of investigation.
- Financial Investigation
An investigator conducting a financial investigation can discover embezzlement, money laundering, fraud, and other white-collar crime.
- Corruption Investigation
Corruption Investigation come in light when there is any case related to bribery, crime that is conducted by the employees of the organization or the company. There the investigator comes in existence where he can unfold the bribery, corruption.
- Electronic Investigation
According to the e-discovery that is initiated in every organization or company the investigator can collect the information and store the information for proving it as an important evidence.
Working of the Business Investigation
The methods of investigation with vary depending on what kind of investigation you are looking for and the individual investigator. Be specific about your needs and the information you are seeking so your investigator can use the right tools to resolve your situation. Some techniques an investigator might use include:
- Financial Investigation
- Due Diligence
- Integrity Testing
- Surveillance
Examples of Business Investigation
As you will learn throughout this book, there are several approaches to take in business background investigations, and all depend on what type of investigation is being requested.
Over time, there are clients who will often ask that what exactly the investigators can find out. There is a difference. When taking on an assignment be sure to ask the client what is expected in the investigative report. Each possible answer will guide the investigator in a different direction: the approach will not be the same for every case.
A typical phone call from a client goes something like this: “I would like to know more about ABC Company.” The investigator’s follow-up questions should be. “What do you want to know about ABC Company’!! Is it a competitor, a potential acquisition or a defaulted company?”
Below are examples of how the Business Investigation is conducted according to the client needs.
Procedural Business Investigation based on the client needs
Competitor Investigation
The Business Investigation was started by drawing an outline of the company, with an emphasis on supply chain vendors, clients, and revenue streams. In addition, to the new trends in the market to formulate where it is heading in the next six months to a year. Finally, according to the analysis the information provided and write a ‘SWOT’ analysis, emphasizing the company’s position in the market compared to similar companies. The report offers recommendations for continued monitoring of this company to avert any surprises.
Potential Acquisition
Recognizing that reputation is as important as finance in business, The different type of searches were carried out through the media including the Internet, to ensure that the company has not come under fire for any malpractices or misdeeds and that its principals have not been accused of criminal misconduct like fraud or collusion. From there, the examination started of the company’s financial health to see if it is ripe for an acquisition. Perhaps it is on its last leg of venture capital investment and is desperate for a new company to purchase it. Finally, looking at the company’s marketing strategy, Web site, and industry reviews there was a learning regarding the products and services, and assess, through analysis, how it compares to its competition in the market.
Perhaps this is a technology company with some cutting-edge software. But, the management is incompetent and cannot market its product effectively. If there are any positive reviews regarding the same that is related to the software but noticed that the product is not selling as much as its competition, then it indicated that the management did’nt kept a watch on the products that it sold. Perhaps the company has incredibly brilliant software developers, but its marketing is targeting the wrong industry. This could be a sign the company is struggling and is just waiting for a more competent competitor to acquire it.
Defaulted Company
If one understands the intended goal of the company to owe the client some kind of money. It has defaulted on its payments, and now the client is looking to site for compensation or collect on a judgment. The main task was to track the assets. Assets could have been moved into the personal funds of the shareholders. The identification regarding all the responsible parties and then examine these principles, including their wealth, homes, other business interests, families, associates, and intangible assets like trademarks and patents.
Other Issues
Each type of investigation has a different starting and ending point. Once the type of investigation is established, you will know if you need to conduct a due diligence investigation on a person or a company or a competitive intelligence analysis on several emerging companies coming to market. Perhaps the investigation is really about finding out who is funding the latest project for a competing company.
Many investigative resources will be repeatedly used, whether it is an acquisition, asset, or due diligence investigation. However, when you get into the minutiae of an investigation that is specifically acquisition, asset, or due diligence, you will find that you must tap into other resources that are specific to what you need.
For example, many business investigations involve compliance issues. Companies are required by various compliance rules, such as SOX; and Foreign Corrupt Practices Act (FCPA) to hire outside vendors to remain unbiased in reporting information. The conflict-of-interest issue is avoided because compliance laws, like SOX, do not permit an accounting firm to conduct due diligence for the same client being audited. As a result, many of these corporate clients look for independent investigators to conduct impartial business investigations. The marketplace is certainly open to those investigators with the right resources and the necessary skill set.
Conclusion
The organizations and the companies that are incorporated must generally understand the different types of frauds that are initiated in the organization. Recently, everyone knows that corporate economic crime is global. It has the power to bring all the organization together with the external advisors. No amount of legislation and regulations will stop director or corporate misconduct. The corporate fraud that is conducted through the investigation can be taken into account as per the corporate governance of the organization or company as a whole.
