Employee Kiting Situations

Our typical process has gone something like this: Once I’m certain there is an issue, I typically notify the VP over the employee’s area and HR A meeting takes place with the employee to obtain an explanation and hopefully a confession. Typically, Internal Audit, HR, and the VP meet with the employee. I have found it is also a good idea for someone to take notes. Recently, an expert fraud investigator suggested that if an employee denies what is happening and it still does not make sense, we should ask the employee to provide a few months’ of statements from the other financial institution, so that we can "understand what is happening". (If they refuse, then based on what we see it looks like kiting and we are required to terminate employment.)  Occasionally, other people may be aware there is something being looked at. The Accounting Manager obtains information on ATM deposits that are made at our ATMs. The Manager that deals with Shared Branching activity may need to obtain information about where a shared branch deposit came from. If there is a question about a system transaction, it’s possible an IT Manager may be consulted. If there are foreign ATM deposits (usually the case these days), I request those directly from the credit union. We have a new (almost two months) head of HR, who has some very strong opinions about how these situations should be conducted. I’m in agreement with some, but mot all, of her opinions. She wants emails to be extremely vague because "emails can be discovered" in a lawsuit situation. (We already know that workpapers can also be subpoenaed in those cases.) She wants the communications about what has occurred, and any updates, to not be in the form of email. She was quite dismayed to find out that some others are aware of the investigation. She is brand-new to financial institutions, so her understanding of how an employee account can touch several departments/functions is still developing.. She wants only HR and Internal Audit meeting with the employee. As for anyone taking notes, she says that is "absolutely inappropriate". I agree with some of her comments about emails; however, there are times when involving another department (always at the manager or above level) is unavoidable. I also believe information should be kept as confidentially as possible, but there are times when discussing how things work, or are possible, is necessary. I don’t agree that meetings with the employee must always be limited to only Internal Audit and HR. And I feel strongly about someone discreetly taking  notes. It has been very effective in conducting other investigations. I’ve been auditing in different types of companies for more years than I want to admit; and at my credit union for over 13 years. To be honest, I’m a little uncomfortable with HR dictating most aspects of this type of investigation. Please share your opinions, agreements, disagreements, and challenges on this subject. Also any sources you might cite that would support (or not0 any of these issues. While I welcome support for my positions, I also welcome challenges to the way we’ve been operating. I appreciate ANY and ALL of your responses! Thank you,Lori Chase