When the National Kidney Foundation (NKF) scandal broke in July 2005, it attracted significant public attention, caused a public outcry and led to the resignation of the then-Chief Executive Officer and its board of directors. KPMG was commissioned to perform an independent forensic audit. A comprehensive report was released in December 2005, which revealed the full scope of the malpractices that had been committed. In the ensuing aftermath, criminal and civil sentences were imposed on certain individuals, while the Charity sector was revamped to enhance accountability and transparency.



Lem Chin Kok, then the project manager of the KPMG team behind the report, believes this episode was a watershed moment for the field of forensic accountancy in Singapore. “It was big news at the time,” he says of the incident. “After our investigation, public awareness of forensic accountancy grew.” As did the firm’s Forensic practice. “When I first joined the firm in early 2002, the Forensic team was less than a year old and consisted of only four people, including me,” says the 43-year-old. Today he leads a team of about 80 people comprising accountants, lawyers, statisticians, data scientists, programmers and former police officers. “Our main objective is to find evidence from clients’ accounting books and records, which may be in physical or electronic form, to substantiate whether wrongdoing exists or not,” explains Mr Lem. It is a role that requires the use of logic to arrive at conclusions – and this deference to logic was what attracted him to accountancy in the first place.




Mr Lem knew he wanted to be an accountant back in secondary school and, given his humble family background, was intent on funding his own tertiary education. Armed with a Diploma in Accountancy from a local polytechnic, he became a police officer in 1994 and paid his own way through the Association of Chartered Certified Accountants Qualification course while working at the same time.


He was subsequently posted to the Commercial Crime Squad, specialising in white-collar crime investigation on matters such as criminal breach of trust, forgery and cheating. As a Senior Investigation Officer, the role suited him to a tee as it merged his accounting and investigative skill sets, and in fact served as his initial foray into forensic accountancy.


In 1999, Mr Lem entered the private sector and took up the role of Regional Finance Manager at a Singapore Exchange-listed communications services company. Managing the finance function of the company’s overseas subsidiaries, spanning seven countries in the Asia Pacific, naturally involved a great deal of travel. While the jetsetting lifestyle was interesting at first, the would-be family man eventually grew weary of the constant flying and began looking for a new career challenge.


The answer to that came at KPMG, where he has been since 2002. Now ASPAC Head of Forensic, Mr Lem oversees the firm’s Forensic practices in Asia Pacific, with Singapore and Indonesia being his direct areas of responsibility. “I still have to travel quite often but not as much as before,” he happily notes. “I try to leave my weekends free to be with my wife and children, aged nine and 13, but they understand that there are times when I have to work or go out of town.”


With clients ranging from government agencies to local listed companies and MNCs, Mr Lem and his team mainly investigate cases of suspected fraud, bribery and corruption, money laundering and other white-collar crimes. In particular, tightly-regulated industries – including financial services, oil and gas, and pharmaceuticals – are the ones most in need of assistance.


Besides these “bread-and-butter” activities, they also provide litigation support to help plaintiffs and defendants in court, while their colleagues strengthen their clients’ control framework to improve regulatory compliance and reduce misconduct risk. “Demand for anti-money laundering services has increased in recent years, so knowledge about anti-money laundering and sanctions is important,” adds Mr Lem.




Another big issue facing forensic accountants is the rise in cyberattacks. Fortunately, their Forensic practice’s “early investment in technology” means that Mr Lem and his team are on the front foot in combating this problem. “During my first few years at the firm, the bulk of my work involved conducting interviews, getting confessions and obtaining source documents,” he recalls. “Then, about 13 years ago, we started building our capabilities in computer forensic imaging and analysis, and about 10 years ago, in forensic data analytics.” This move towards digitisation occurred just as accounting books and records were shifting from physical to electronic form, sparking a change in the way investigations would be performed in order to do them well.


Today, the majority of KPMG Forensic’s investigations employ forensic technology and data analytics, and the benefits are inestimable. For example, when scrutinising the millions of transactions carried out by an MNC, forensic accountants no longer need to peruse or print out all the supporting documents. They can simply download the data, run it through advanced data analytic models, and use data visualisation tools to observe interesting patterns and correlations.


“One can get so much visibility from data analytics that otherwise would not be seen by looking only at the raw data,” explains Mr Lem. In a sign of the firm’s deepening embrace of technology, the Forensic team ventured into artificial intelligence – the capacity of machines to perform tasks normally done by humans – four years ago.




The fact that the NKF controversy occurred in Singapore – a country which enjoys a reputation for transparent financial reporting – highlights a central axiom in forensic accountancy – “Fraud is perpetrated by people,” says Mr Lem. “Once people become part of the equation, anything can happen, no matter how many controls are put in place, because controls are operated by people after all.”


To further prove his point, Mr Lem mentions a recent case in which they were asked to look into the accounting records of a local company that had engaged in a sale-and-leaseback arrangement for one of its properties. The company’s audit committee suspected that something was amiss about the transaction, and the hunch turned out to be correct – Mr Lem and his team discovered that the firm’s CEO and CFO had secretly pocketed the proceeds from the sale of the property. This is despite the fact that the sale-and-leaseback transaction and the subsequent use of the proceeds are fully supported contractually.


But it is not just the people being investigated who might be guilty of wrongdoing; sometimes the investigators themselves may not be as qualified as what they claimed to be in this niche sector. Some forensic accountants, for instance, may claim to have hard-drive forensic imaging capabilities but in reality, all they do is capture a copy of the data stored in the computer without capturing the deleted data, and the procedure is not performed in a manner that can withstand challenges in court.


“Being an ISCA member does provide an extra level of comfort to the market that you are of a certain calibre and that your work is up to standard,” says Mr Lem, an invited speaker at ISCA’s inaugural Financial Forensic Conference coming up this September 28. “This is especially true for auditors and bookkeepers. For forensic accountants, perhaps an additional professional qualification is needed so that clients feel confident about the quality of our work.”


What makes a good forensic accountant? “He or she must be able to think a few steps ahead to foretell or anticipate the perpetrator’s moves. If a perpetrator commits a fraud and he tends to also tick off all the internal controls that have been put in place, then the investigator can’t detect the fraud if all he does is look out for control breaches. The investigator has to look beyond internal controls to detect fraud,” explains Mr Lem. He or she should also be able to look at the big picture and see things from a bird’s-eye view, while dealing with the nitty-gritty details at the same time.


“There is one more axiom that all forensic accountants would do well to remember – Every case is different. The same fraud does not happen twice, so you have to tailor each investigation in the most effective way,” says Mr Lem.


Career Milestones


Wanda Tan is a contributing writer.