The Economics of Fraud Investigations: Costs, Drivers, and Solutions for Greater Efficiency

Fraud investigations carry high stakes, particularly for forensic accountants, law firms, and investigators whose expertise is relied upon to uncover and prove financial and prove misconduct. Effective, thorough, and timely investigations are essential for identifying misappropriated funds, providing clear, defensible evidence, and securing asset recovery for affected parties. 

Yet, the cost and time required to complete these investigations can present significant challenges. Understanding what drives expenses and how they can be effectively managed –  and dramatically reduced – is critical for forensic accounting professionals who want to grow their business, and for investigators and law firms looking to speed their time to resolution.

“Fraud doesn’t just result in financial loss—it creates ripple effects that can damage a company’s reputation and erode trust among stakeholders,” says Tiffany Couch, Principal at Acuity Forensics and author of The Thief in Your Company. “Addressing fraud swiftly and thoroughly is essential, even when it comes at a cost.”

Core Cost Drivers of a Fraud Investigation

Scope of Investigation

The scope of a forensic investigation is one of the most significant factors influencing cost. For example, examining an employee’s misuse of a company credit card requires fewer resources than uncovering a large-scale embezzlement scheme. Broader investigations that involve multiple stakeholders or jurisdictions, massive transaction volumes, or intricate financial arrangements demand more time and expertise, increasing overall costs.

Data Preparation 

Jeffrey Bussell, Senior Director of Operations at CBIZ Forensic Consulting Group, highlights the significant time spent preparing data in fraud investigations. “During our analysis, we found that roughly 75% of the time incurred was spent upfront on data preparation. Once the data was properly organized, the categorization and analysis became much more straightforward.”

Streamlining data preparation not only enhances confidence in the integrity of the data but also frees professionals to focus on the strategic aspects of a case—analyzing patterns, uncovering anomalies, and providing insights—rather than getting bogged down in time-consuming manual organization.

Victoria V. Kirilloff, CDFA®, NCPM®, CDS® from Divorce Analytics, adds, “Setting a strong foundation in the data preparation phase is non-negotiable. It’s what ensures that the findings can withstand scrutiny.”

Quickly Identifying Areas Requiring Scrutiny

Financial fraud investigators understand the challenge of being buried under a mountain of transaction data, making it difficult to determine where to focus their limited time during a forensic accounting investigation. 

Bank statements, checks, brokerage data and more must be captured, reconciled, and categorized, and the ability to quickly pinpoint areas of potential concern is crucial—especially when working under tight timelines. This might involve identifying missing statements, transfers between accounts and legal entities designed to obfuscate funding flows, or discovering undisclosed accounts. The faster these areas are identified, the more time the professionals can dedicate to meaningful analysis. 

Real-World Insights: Case Studies and Cost Examples

Jeffrey Bussell’s findings highlight It’s a common misconception among clients is that tasks like data reconciliation are simple. In reality, these efforts are resource-intensive and prone to errors that are costly to identify and correct, particularly for cases involving thousands of transactions. For instance, Bussell calculated the processing cost per bank transaction to average betweenThe average processing cost per bank transaction for data reconciliation in a fraud investigation ranges from $7 and $8, underscoring how quickly expenses can escalate when using traditional methods.

Eli Neal, CPA, ABV, CFF, and Principal at 4 Corners Financial Forensics, echoes this challenge with an example from his firm’s use of Valid8. Neal recalls, “We handled a divorce case involving 16 accounts and over 10,000 transactions dating back six and a half years. Traditionally, the data entry alone would have consumed weeks, delaying the analysis and stretching our team’s capacity. With Valid8, we prepared the data in hours and could immediately focus on the nuanced aspects of categorizing transactions to identify which expenses related to renovation projects. This transformed the case for us.”

In this case, Valid8’s automated transaction extraction and categorization allowed Neal’s team to prepare court-ready data in under 24 hours. The result? A detailed analysis of $2 million in proceeds that enabled both parties to achieve a fair and equitable split of assets before mediation deadlines. “The challenge was parsing out what was and wasn’t related to renovation costs. Valid8 made it efficient to categorize and present findings backed by clear evidence,” Neal explains.

These examples illustrate how leveraging technology can redefine the economics of fraud and forensic cases. By saving weeks of manual effort, firms like 4 Corners can take on cases previously out of reach, while reducing costs for clients and delivering results faster.

Typical Cost Ranges for Fraud Investigations

Costs for fraud investigations vary depending on the size and scope of the case. According to industry insights from resources like the Association of Certified Fraud Examiners (ACFE):

• Small cases: $5,000–$20,000
• Medium cases: $20,000–$75,000
• Large or complex cases: $75,000+

Factors such as geographic location, the level of expertise required, and the urgency of the investigation can influence these ranges.

New Approaches Address Both Speed and Costs

Advances in technology are transforming how fraud investigations are conducted. Secure, cloud-based platforms can now go well beyond traditional OCR-based tools that simply transcribe financial data yet also require strictly formatted inputs and manual quality review.  Investigators are now able to automate the full process of data ingestion, quality assurance, entity association, transaction mapping, categorization and classification, processing tens or hundreds of thousands of transactions often within 24 hours. Tools that can ingest and reconcile financial data so quickly, and proactively identify issues that require focus or resolution, removes the need for manual data entry. While this ultimately reduces the cost of the investigation in terms of hours used for manual work, the impact for the professional is about more than the cost.

Eliminating manual work saves professionals a significant amount of time, enabling them to process individual cases faster and to handle a greater volume of cases—including more intricate investigations—while dedicating more billable hours to strategic analysis and positive case outcomes.

Bussell notes, “The days of charging clients large fees for data entry work are over—and this is a good thing. Technology allows us to deliver results faster and with better efficiency.”

Tiffany Couch notes adds, “By incorporating the right technology, professionals can not only reduce costs but also improve outcomes for their clients. The ability to focus on higher-value work strengthens the client relationship and enhances profitability.”

Unlock Growth with Increased Efficiency

While it may seem counterintuitive to the traditional billable hours model, decreasing costs will increase the efficiency and value of forensic accounting investigations. By streamlining workflows, firms can take on a higher volume of cases—including more intricate investigations requiring more complex analysis and strategy. They can do this without adding more staff, while existing resources can focus on higher-value, billable client activities. 

Immediate steps firms can take:

• Automate Data Preparation: Use automated solutions to streamline data preparation, categorization, and reconciliation to reduce the manual work involved.
• Leverage AI to Identify Potential Concerns: Use modern software, like Verified Financial Intelligence (VFI) platforms that incorporate predictive AI and machine learning along with powerful transaction tracing algorithms, to automatically flag missing or incorrect data, identify transfers between accounts and legal entities, and generate courtroom-ready evidence. These capabilities allow professionals to focus their investigative efforts on the most critical areas.
• Focus on High-Value Work: Delegate repetitive tasks to technology, freeing up professionals to dedicate more time on strategic analysis and insights.

Kirilloff emphasizes, “Investing in the right tools and processes can reduce time spent on routine tasks and create real savings for clients.”

Reinforcing Expertise Through Effective Investigations

For forensic accountants, the value of a fraud investigation goes beyond resolving the immediate issue. Each engagement is an opportunity to demonstrate expertise, provide valuable insights, and strengthen trust with attorneys, clients, and courts. By focusing on quickly delivering clear, complete, defensible findings, forensic professionals not only help resolve cases but also contribute to a higher standard of practice in the field.

“The most effective fraud investigations don’t just address the issue at hand—they reinforce the credibility and reliability of the professionals conducting them,” Couch concludes. “When every question is answered and every number accounted for, the outcome speaks volumes about the expertise behind the work.”

Final Thoughts: Maximizing Efficiency in Fraud Investigations

Fraud investigations, whether they form a portion of a firm’s services or the core of its practice, demand a substantial time investment. Recognizing the key drivers of cost and adopting technology to boost efficiency are essential steps in delivering high-value results while positioning the firm for growth.

If you’d like to learn more about how Valid8 can enhance your fraud investigations, contact us directly.