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Rise of Internal Investigations: Temporary phenomenon or Regular Trend?

June 22, 2018
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An Internal Investigation is a formal inquiry into any alleged misconduct or wrongdoings in an organisation. This investigation is handled by an appointed internal team of the company. Internal investigation teams are becoming increasingly important in organisations today. Being able to analyse large amounts of information at once is crucial. With more and more investigative teams coming up, organizations now display efficient information and data management.

The appointment of internal teams for investigations into employee or company activities, is now on the rise as these teams enable managements and directors in an organisation to diligently fulfill their duties and responsibilities. The primary purpose of an internal investigation is to gather facts so that an organization can determine the seriousness of the situation and to find appropriate responses. With an efficient internal team in place, organizations and companies have a chance to rectify problems before they lead to the stage of litigation. An internal investigation also allows a company to assess its systems and controls, and to develop an appropriate system of measures to address any deficiencies.

As the regulatory environment in organisations has become more serious, organisations are increasingly building internal teams that can look into allegations of fraud by employees or even data mismanagement.These teams allow the organisations to be prepared for the storm before it strikes and also increase an employee's level of preparedness and response. An effective investigation team provides the management with the information they may need to make an informed decision on how to proceed in the face of alleged misconduct. In many cases, the investigation will provide the information needed to take steps to ensure that no future violations occur.

An internal investigation team will further assist the company in gathering information, plotting defenses and crafting a remedy for the misconduct. More and more organizations have now begun to hire internal investigation teams to enable the company to assess the level of potential wrongdoing in the organization and draft suitable measures to regulate and control the same. They help to quickly secure and collect relevant documents and identify key legal issues and defenses.

More and more organizations now opt for internal investigative teams because of the benefits they provide. It’s always better to avoid conducting an internal investigation, but sometimes a problem warrants the commencement of the investigation. A structured investigation process is very much needed and is effective in checking malpractices within an organization and serving as a deterrent against future instances of corruption.

Often, an internal investigation is the most effective way of getting on top of a problem before others (regulators, law enforcement agencies) have the opportunity to do so. This is why, most organizations today prefer having an internal team ready to investigate the on-going issue. Getting ahead on the allegations early will not only save money in the long run, but may also minimize reputational costs and the risks of incurring further expenses in the form of lawsuits and regulatory investigations.

Allowing in-house teams to conduct the investigation as opposed to outsourcing may be less disruptive and could decrease the employees’ level of concern over the seriousness of the situation. Such internal teams may also be the most economical solution and tend to have a better idea about the organization and their own team capabilities(edit). The advantage of having them is a better choice as opposed to an outside counsel in terms of cost control. It may also be easier to maintain an internal team rather than having to undertake the expenses of an outside counsel, each time an inquiry needs to be initiated.

The need for companies to conduct internal investigations will likely increase each day. The economic downturn increases pressures on companies to make sales, which can lead to more pressure to entertain improper payments. These trends make cost-effective internal investigations more important.