Unveiling the Truth: Key Database Insights for Forensic Accounting Investigations

By Tyson Slesnick, CPA, CFE, Forensic Data Analyst

 

 

When conducting a forensic accounting investigation involving a database, a carefully constructed database request can provide access to key data that is critical for uncovering facts and establishing the truth. The specific data you may subpoena depends on the nature of the case and the type of database(s) involved. However, several common database elements should be included in a request.

Transaction Records

Transaction records are a cornerstone of financial or business-related investigations, providing critical insights into the flow of resources within an organization. These records typically encompass a wide range of data, including details of financial transfers, purchase histories, sales transactions, and corresponding audit trails. Financial transfer records can reveal patterns indicative of fraud, such as unusual transaction amounts, frequent transfers to unknown accounts or discrepancies in account balances. Purchase histories can help identify irregularities in procurement processes, such as inflated invoices or unauthorized purchases, while sales data can uncover anomalies like phantom sales or unrecorded revenue.

A carefully worded data request should request all available data fields attached to transaction records, along with field definitions. We commonly receive data production that does not include all available fields, and only by sleuthing and making additional requests do we discover that more data existed related to each transaction record.

Audit Trails

Audit trails play a pivotal role by offering a chronological map of every modification made to a transaction, including timestamps, user IDs and the nature of the changes. This level of detail allows forensic accountants to trace the origins of discrepancies, identify responsible parties and assess whether intentional misconduct occurred. Together, these records form a comprehensive picture of the organization’s financial activity, aiding in the detection and prevention of fraudulent schemes, compliance violations or operational inefficiencies.

Activity Logs

Closely related to audit trails, another crucial component of a database request is user activity logs. These logs monitor, and record actions taken by users within the system. They are invaluable for forensic accountants, as they can reveal who accessed specific records, made modifications, or deleted data—offering a detailed view of potential fraud or unauthorized activity. Similarly, access control logs, which document who holds administrative privileges, can shed light on whether elevated permissions were improperly used, further aiding in the detection of unauthorized actions or security breaches.

Metadata

Metadata includes information about when and how data was created, modified, or accessed, which can be critical in an investigation. It helps us understand the timeline of events and how the database has been used. Additionally, emails and internal communications stored within or linked to the database can reveal intentions or discussions related to transactions or changes within the system, making them valuable in cases of fraud or misconduct. Comparing metadata across time can also prove to be very fruitful for other areas of general analysis. Business intelligence tools can be particularly effective in this area to help move the data discovery agenda along.

 

Data Backups

Subpoenaing data backups is a common and crucial step in investigations, as these backups provide historical snapshots of the database, allowing for comparisons with current records to detect potential tampering, unauthorized modifications, or deletions. Beyond their role in uncovering discrepancies, data backups significantly streamline the analysis process by providing a ready-to-use dataset. This enables us to focus on identifying patterns and anomalies without the need to reconstruct or reconfigure data loading workflows or ETL (Extract, Transform, Load) processes from scratch. These backups not only enhance efficiency and reduce costs, but also ensure the integrity of the data, making them a vital tool in forensic investigations.

 

Files and Attachments

Stored files and attachments, such as scanned documents, contracts, or media files, can serve as supporting evidence in many cases. By specifically requesting these elements, we can reconstruct the flow of data, detect tampering and better understand the events surrounding the investigation.

 

Turning Data into Insights

Once the produced data becomes available, expert data evaluation becomes the pivotal next step in the investigative process. While traditional analysis methods are widely recognized, two lesser-known but highly effective tools—text analytics and metadata analysis—can offer unique insights into investigative matters.

Text analytics focuses on processing and analyzing unstructured text data, such as emails, internal communications, or free-text fields within the database. By leveraging natural language processing (NLP) techniques as well as other artificial intelligence tools, we can uncover crucial details like recurring themes, key phrases and sentiments that might indicate fraud or misconduct. This approach can reveal suspicious language, patterns of unethical behavior or intent behind transactions. Sentiment analysis further enhances this by identifying emotional tones in communications, such as frustration, fear, or deception, while network analysis can expose hidden relationships or collusion among individuals through their communication patterns.

As discussed earlier, metadata analysis, on the other hand, focuses on the structured data that describes other data, such as timestamps, user permissions, file sizes and modification histories. Analyzing metadata helps us uncover patterns or anomalies that may not be visible from the raw data alone. For instance, we can track when records were created, modified, or deleted and identify unusual activity, such as unauthorized users accessing sensitive records or modifications occurring outside of normal working hours. Anachronism becomes relevant in this context when metadata reveals timestamps or events that are inconsistent with the expected timeline. For example, a document with a creation date in the future or a modified timestamp preceding the creation date may indicate tampering or system manipulation. Such inconsistencies provide critical leads by flagging potential fraud, backdating, or postdating of records.

 

Bottom Line: Getting and Analyzing the Right Data Can Be Crucial to Your Case

Applying analytical methods and database expertise, with robust data production, we can investigate beneath the surface of basic transactional data to detect hidden patterns, expose abnormal trends, and help build key evidence for a litigation matter.

 

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Tyson Slesnick, CPA, CFE supports our senior testifying experts by investigating and distilling large sets of financial data. He applies his advanced data analytics skills to find key insights and evidence that will form the basis of reported opinions.

503.906.1587 |  [email protected]

 

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