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Asset Tracing and Forensic Methods

February 15, 2019
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Asset Tracing and Forensic Methods

By Majella Gomes

When firms are confronted with insolvency, their assets will determine how much they are worth. But these have to be properly identified – not an easy process in today’s business environment where a lot of a company’s value comprises intangible assets. This is where forensic investigators come in and utilise technology integrated with forensic methods to trace assets and ascertain the market value of the firm.

Increasing Technology, Data Volumes

Technology plays a substantial role in forensics as it preserves evidence that is adduced in a court of law: hard- and soft-copy documents and evidence of transactions and assets, said Belinda Tan, Partner and Leader, Forensic & Integrity Service, EY Singapore.

With the application of technology and the extensive use of artificial intelligence, the bulk of data like deleted e-mails and electronically destroyed information can be recovered. “Data can be rebuilt and restored but the problem now is the volume of data – terabytes of it,” said Darren Cerasi, Partner, Forensic APAC, Deloitte Singapore, underscoring the irony of the fact that having used technology to generate so much data, technological tools were now being applied to pare it all down.

This data is invaluable when unshakeable evidence is required by the courts before they decide on a course of action. “We need documents and analysis of outcomes to establish parameters of evidence,” said John Mathew, Partner, Christopher & Lee Ong. “At the end of the day, we need a basis to go to court. Courts have tools but are reluctant to use them because of grave implications. So we need to establish evidential bases first.” A high bar is set to ensure the integrity of such evidence, with multiple checks and verification at different stages to comply with stringent and conservative requirements of the Malaysian courts, although there is increasingly greater acceptance of technology within the judicial process.

(L – R) Darren Cerasi, Khoo Poh Poh, Belinda Tan and John Mathew

Upskilling

Insolvency professionals are generally not trained in the use of forensic tools and technology although some may have the basics. Sound knowledge of Excel will go a long way to upskilling, and online courses are readily available. Some professionals may already be dealing with forensics without fully realising it, particularly if they are using software for analytics and digital payment apps.

But they will need to learn to use better tools, and attitude must support aptitude. They need to know how the software works, and how relevant it is to what they want to achieve. All data resides on a platform somewhere. “Take the old-fashioned way,” Tan advised. “Download the data, run it with specialised software, establish parameters and find the relevant information.”

Knowing how to handle the tools will add value to the service but how does the insolvency professional handle hostility in the firm that is undergoing investigation?  “Use terms like ‘tech support’ instead of ‘forensic investigation’,” suggested Cerasi, to mask the true purpose of the insolvency investigation.