E-Collaboration as a Tool in the Investigation of Occupational Fraud

E-collaboration has become a staple of productivity in organizations of all sizes and types in the last decade. As the Fortune 500 companies have now moved to a 100% participation rate in a blended e-mail/instant messenger communication environment, it is estimated that 3% to 6% of the leaders, including such names as General Motors, Microsoft, and Boeing have even instituted official corporate blog sites (Bruner, 2005). As the techniques and uses of e-collaboration become more pronounced in firms, the need for related guidance in the occupational fraud examination field is growing. While both the theoretical and applied e-collaboration literatures are increasing, this is a relatively unexplored area in the field of fraud examination. Fraud can be widely classified as either fraud against or on behalf of the organization. While fraud on behalf of the organization, such as financial statement fraud, has made the most sensational headlines recently (i.e., Enron, WorldCom, Arthur Anderson), it is occupational fraud against the organization that has the most widespread effects. In its most recent account on occupational fraud (ACFE, 2004), the Association of Certified Fraud Examiners reported that the average organization loses 6% of revenues to occupational fraud and abuse, and these losses cut across virtually every size and type of institution. The default model typically used for reacting to occupational fraud against the organization follows four traditional steps (Albrecht, McDermott, & Williams, 1994). First, an incident occurs. Second, an investigation ensues centered around interviewing and document examination. Third, at the end of an investigation, a resolution is determined on what action, if any, is to be taken. Finally, the company chooses to act (or not act) publicly or legally related to the fraud occurrence. The purpose of this article is to blend previous research in the fields of e-collaboration and fraud examination. Specifically, compensatory adaptation theory (Kock, 1998) is used as a lens through which to model the optimal use of e-collaboration during the aforementioned second step of the default fraud model; the investigation process of occupational fraud. Finally, examples of investigatory pros and cons are presented to illustrate the model’s approach towards local optima usage points.