The Private Eyes of Corporate Culture: The Forensic Accounting and Corporate Investigation Industry and the Production of Corporate Financial Security

Abstract

Thanks to a seemingly endless parade of corporate and financial scandals over the past 15 years, with notable examples ranging from the dot com bubble, to the subprime crisis, to the Bernie Madoff Ponzi scheme, to the Libor rate-setting scandal, fraud and financial wrongdoing now occupy a prominent place on the corporate agenda. At the same time, there has been a rapid growth of fraud advisory, investigative, and consulting services directed primarily to corporate clients and involving a range of ‘advisory solutions’ to financial misconduct. These ‘solutions’ include fraud vulnerability assessments, compliance reviews, whistleblower hotlines, and forensic investigations with accounting firms, law firms, as well as specialized corporate investigation agencies all staking claim to this territory. Such developments are indicative of a growing concern with ‘corporate security’ defined less as physical security of hard assets and more as protection of financial, intellectual, and informational assets and the buffering of the corporation from new forms of legal, regulatory, and prudential risk and liability. Despite these con-cerns with financial impropriety and the rapid growth of this practice area, little is known about these advisory and investigative firms and the extent to which they deal with financial misconduct in its various guises.