The Role of the Certified Fraud Examiner in a Financial Investigation
Understanding the Role and Essential Competencies of Certified Fraud Examiners in White-Collar Crime Investigation
The Association of Certified Fraud Examiners (ACFE) is an organization of professionals whose mission is to reduce the incidence of fraud and white-collar crime and to assist its members in fraud detection and deterrence.
The Certified Fraud Examiner’s (CFE) involvement in fraud investigation cases is typically limited to white-collar crimes such as fraud, financial statement misrepresentation, or insider trading. Their work focuses on financial forensic investigation procedures designed to identify and reconstruct the improper and potentially illegal flow of money. The role of the CFE in a fraud investigation generally begins with an allegation of criminal activity. The CFE’s responsibility is to obtain sufficient, relevant data and financial evidence to support or refute the allegation.
CFEs apply a combination of accounting, fraud examination, and investigative skills to the financial issues in the case. Their services involve the application of specialized knowledge and investigative skills to collect, analyze, and evaluate evidential material, and to interpret and communicate findings. Financial facts are established through witness testimony supported by documentary evidence. Most evidence will either be testimonial or circumstantial; that is, it will be obtained through interviews or documentary analysis. Testimony and documents must be competent, relevant, and material to the issues and must be gathered legally. This includes obtaining evidence, taking witness statements, and preparing written reports.
The CFE can provide services during the investigation, trial preparation, trial, and sentencing phases of a white-collar crime case. Typically, the CFE is retained by the prosecution during the investigative phase and by the defense during trial preparation, trial, and sentencing phases.
Regardless of whether the CFE is working for the prosecution or the defense, they must serve their client with integrity and objectivity in their professional opinions and should not act as an advocate for the client’s position. Objectivity means dealing with facts or conditions without distortion by personal feelings, prejudices, or interpretations. The role of the CFE is that of a fact-finder seeking the truth.
Fraud investigations often involve complex and confusing trails of money and documents that require assistance from cooperating witnesses to interpret. This includes identifying all witnesses involved in a transaction, determining their status and location, questioning witnesses to authenticate documents, and documenting the information obtained.
Often, the CFE’s evidence is gathered in conjunction with grand jury proceedings. The CFE may assist the prosecutor with preparing grand jury subpoenas, preparing financial witnesses who will testify before the grand jury, and reviewing grand jury evidence.
After the grand jury issues an indictment, the CFE may be hired by the defense in preparation for trial. In this role, the CFE provides an assessment of the government’s financial findings and opinions, and evaluates financial documents as they relate to the allegations in the indictment. This may include reviewing the indictment, assisting with case strategy regarding financial issues, managing and reviewing documents, interpreting and analyzing financial evidence, observing testimony from financial fact and expert witnesses during trial, and aiding in the preparation of cross-examination of expert witnesses.
The CFE may also assist during settlement negotiations for potential plea agreements and with post-trial matters involving asset forfeiture and restitution.
Credentials and Competencies of an Effective CFE
- Knowledge of professional standards established by the Association of Certified Fraud Examiners
- Knowledge of federal and state laws, rules of evidence, and applicable legal jurisdictions
- Fraud knowledge, including experience with books and records, normal business practices, and understanding of tax transactions and consequences
- Familiarity with issues arising from mismanagement and fraudulent manipulation of accounting transactions, records, and reports
- Ability to collect evidence, including affidavits, search warrants, and records seized by the government; subpoena additional documents; identify forged or reconstructed records; conduct third-party verification of known financial information; identify unknown information; and prepare a net worth analysis, financial profile, and personal lifestyle profile to understand an individual’s financial condition, integrity, and reputation
- Professional skepticism—challenging irregularities in source documents, unexplained adjustments, unreasonable expenses, and unsupported journal entries
- Investigative competency—an inquiring, observant, intuitive, detail-oriented mindset; fraud cases are often won or lost in the details
- Understanding of psychological theories related to criminal behavior, particularly white-collar offenders
- Strong interpersonal and communication skills, especially in interviews and interrogations
- Ability to conduct strategic interviews that encourage cooperation, identify document authenticity, and uncover the truth behind financial schemes
- Ability to ask the right questions at the right time and recognize dishonesty or concealed motives
- Ability to develop and maintain cooperative working relationships with multidisciplinary professionals in team-based investigations
- Adaptability and flexibility, recognizing that each investigation evolves as new information emerges
- Ability to operate under pressure, manage crises, work with limited structure, and function effectively under tight deadlines
