A report of market manipulation implicating two employees hits your desk. You’ve got their trading results but the complainant thinks the whole team might be involved over many months. The Board will want an urgent interim report and ASIC will be looking for their own answers. You need to take the right steps in the right order – now.
From an organisation’s perspective, scoping an investigation can be the most challenging aspect of the investigatory process. It must balance the competing interests of discovering and exploring as much relevant information as possible to meet its legal obligations and identify risk, against learning of so much information that the identification of further issues pile up, triggering a cycle of perpetual investigation.
Scoping an investigation well (particularly a factually or legally complex scenario) takes experience and expertise. This article won’t plug those gaps, but it will summarise the essential factors relevant to all investigations and offer some tips to avoid common mistakes.
When scoping an investigation, ask these 3 questions:
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- Which issues need to be investigated?
- What period of time should the investigation cover? For example, if the main issue revolves around a single incident, should the period include events leading to or following the incident.
- What are the objectives of the investigation? For example, where allegations have been made, an objective would be to determine whether those allegations are substantiated.
Once you have sensible answers to these questions, plan for any practical issues which might impact the investigation. Critical timings and deadlines should be identified and included at this stage. If urgent responses to certain issues are required, narrowing the scope or prioritising the exploration of certain issues can help. Care should be taken, though, that any modifications to the scope do not compromise the integrity of the process or significantly affect the quality of the information obtained. For example, a timing issue often arises where an employee has resigned. Depending on the situation, it may be necessary to interview or examine the employee’s involvement before their employment termination date, whilst they are contractually obliged to participate and co-operate.
A scoping document should always include at least the following information:
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- The factual background to the issue(s)or incident(s);
- The issues to be investigated, including any relevant systems, controls or management issues which relate to the situation;
- Any relevant laws, regulations or internal policies applicable to the issue(s) or incident(s);
- The specific objectives of the investigation.
Whether engaging external or internal investigation personnel, a competent scoping document will set an investigation up for success. Besides ensuring both mandatory and optimum outcomes are reached, it should create an appropriate endpoint for the investigation to terminate. If the scope has been followed, an organisation can be confident that its investigatory aims have been met efficiently and appropriately.
Lastly, remember to monitor and review your scope. Frequently, information discovered during the investigation process will impact its scope, sometimes significantly. Scheduling regular check-ins throughout will ensure proper outcomes during changing circumstances.
If you would like expert advice on scoping a particular investigation, or best practice strategies you can build into your processes, please get in touch.