An internal investigation is a formal investigation conducted by an enterprise to determine whether the business has violated laws, regulations and internal policies. In addition, an internal investigation may also occur in the context of the Legal Due Diligence process when M&A deals take place.
1. Why conduct an internal investigation? What is the benefit?
Internal investigations help businesses assess the effectiveness of their processes and operations, enhancing transparency and the ability to detect errors or violations of laws and corporate policies early. If done properly, an internal investigation can help reduce the risk to your business. The ultimate goal of an internal investigation is to prevent risks, ensure compliance, to create a solid foundation for business growth. Therefore, an optimal internal investigation process must be fast, fair and thorough to achieve its goals.
Furthermore, by conducting an investigation, businesses demonstrate that they are taking violations of the law seriously, and subsequent remedial action demonstrates that they expect their employees to comply with the regulations. Higher standards by complying with relevant laws and corporate policies.
2. Implementation process
An internal investigation includes the following steps:
- Determine the purpose, scope, and object of the investigation: Clearly define the purpose, scope, and object of the investigation to help the investigation team focus on the issues to be solved. An investigation can be defined and carried out as a whole or as only one aspect of certain activities of the business.
- Create an investigation plan: Create an investigation plan detailing the steps to conduct the investigation, resources, stakeholders, and expected timelines.
- Information and data collection: Collecting records, documents, and evidence related to the incident, ensuring its integrity and reliability.
- Analysis and evaluation: Analyze and evaluate the records, documents and evidence collected to identify problems, risks or possible violations.
- Summary of investigation results: Summarize the results of the investigation in a report, including documents and conclusions.
- Proposing solutions: Based on the results of the investigation, propose solutions to overcome the problem or limit risks in the future.
- Implement solutions: Take necessary or planned actions to fix the problem and/or limit the risk within a certain period.
- Monitoring and evaluation: Monitor, evaluate, and ensure that solutions are properly implemented and effective, implementing backup or alternative solutions if necessary.
3. Difficulties encountered during an internal investigation
3.1 Lack of cooperation
During an investigation, officers may not be willing to provide information or cooperate with the investigative team.
3.2 Difficulty in gathering evidence
It may be difficult to gather enough evidence to identify violations. These pieces of evidence can be hidden, deleted or altered.
3.3 Time and resources
Internal investigations are often time-resource intensive, especially in cases that are complex or involve multiple parties.
3.4 Difficulties in ensuring transparency and fairness
There may be difficulties in ensuring transparency and fairness in the investigation process, due to the interference of stakeholders or the personal motives of the parties concerned. Investigative staff. Sometimes the investigation can be done in secret.
4. What issues are not investigated?
In addition, it should be noted that not all matters within a business are suitable for internal investigation. Matters such as personnel matters, family matters, and matters involving employees’ personal affairs should not be investigated internally. In the process of conducting internal investigations, it is necessary to pay attention to transparency and respect for the privacy of employees to ensure the confidentiality of enterprise information from other objects. Depending on the purpose of the investigation, the business will need to inform employees of the investigation process and its purpose. If necessary, businesses should also consult relevant laws and regulations to ensure that investigations are carried out in due course and do not violate employee privacy.
5. Notes on conducting an investigation
The timeliness of an investigation will vary depending on the number and complexity of issues raised, the number and availability of witnesses, and the time it takes to gather evidence. However, all investigations must be conducted promptly. Initiating an investigation immediately will help resolve the matter as quickly and fairly as possible.
The confidentiality of information obtained during an internal investigation must be a top priority. Officers conducting investigations should ensure that the information they obtain is disclosed only when appropriate or as required by law.
In addition, the following issues should be noted:
- Rights of the person being investigated
- Transparency and fairness of the investigation process
- Interested parties and influences on the investigation process
6. The end
Many businesses entrust their internal lawyers or human resources departments with control over internal investigations. However, there are many reasons why many businesses choose to hire outside consultants. This is common when the officer conducting the investigation is a subordinate of the person under investigation or has a personal relationship with the person under investigation, or is even involved in the matter of investigation. Both reduce the independence of the investigation, causing many businesses to hire outside people to do it.
This is especially true for outside consultants who have never represented the business. They are generally considered more independent than those with previous affiliations. This independence is often a boon in serious matters, especially if a business decides to disclose details or findings of an investigation to the authorities.
If you are a business owner who needs advice on conducting an internal investigation, or if you have decided to hire an independent law firm to investigate a reported violation, you should contact us to discuss the problem and the services we can provide. We are adept at conducting an effective investigation with minimal interference with employees and business operations.
