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The Litigation Side of Forensic Accounting Copyrighted 2001 D. Larry Crumbley, CPA, Cr.FA, CFD KPMG ... - page 119 / 275

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© D.L. Crumbley

Top 10 Risks During Electronic Evidence Discovery in Litigation

Automated processes. Companies are unsystematic about what information they automatically save and delete. When companies enter into litigation, they are under strict legal obligation to ensure that they preserve all relevant information. Upon determining that a loss of information (spoliation) has occurred, a judge can automatically instruct the jury to assume the worst; for example, that inadvertently deleted records contained unfavorable information. Depending upon the seriousness of the infraction, this can even lead to a directed verdict.

Manual systems. Despite great advances in integration and enterprise resource planning (ERP) systems, many companies use a mix of automated and manual processes (e.g., the spreadsheet used to transform data from the inventory system before loading it into the general ledger). Such manual processes often suffer from a lack of documentation, lack of retention, and a lack of systematic application. This inevitably makes reconstructing what happened more difficult and costly.

FTI consulting (www.nysscpa.org/cpajournal/2003/1003/nylny11).

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