a. Accountability for Physical
Evidence. EBSA investigations require the collection and
preservation of evidence consisting of, but not limited to,
plan records, company and union records, bank records,
reports of interview (RIs), signed statements, and related
workpapers.
To assure that the value of physical
evidence is not impaired or destroyed, the
Investigator/Auditor must ensure that the evidence meets the
test of admissibility. To pass this test it must be
positively identified as authentic, relevant, unaltered, and
untampered with. In short, the Investigator/Auditor must be
able to testify, under oath, that the particular document is
one obtained in the investigation; that it has since been in
the Investigator's/Auditor's personal or accountable
custody; and that it has not been accidentally or purposely
altered.
b. Federal Rules of Evidence. All
Investigators/Auditors are expected to be generally familiar
with the Federal Rules of Evidence, which appear in Public
Law 93-595. Special attention should be devoted to Article VIII,
"Hearsay," Article IX, "Authentication and
Identification," and Article X, "Contents of
Writings, Records and Photographs." Questions
concerning evidentiary matters can generally be addressed to
SOL.
c. Admissibility of Duplicates.
Rule 1003 of the Federal Rules of Evidence provides:
"A duplicate is admissible to the
same extent as an original unless: (1) a genuine question is
raised as to the authenticity of the original or (2) in the
circumstances it would be unfair to admit the duplicate in
lieu of the original."
Based on this rule, in most situations, a
copy of a document will be sufficient provided that the
Investigator/Auditor is able to testify that the original of
the document was obtained from a reliable source and that
the document has not been altered during the time it was in
the Investigator's/Auditor's possession.
d. Receipts for Books, Records, and
Documents Obtained. When it is necessary to take
possession of documentary evidence or property such as
books, records, canceled checks, bank statements, receipt
books, invoices, vouchers, letters, memoranda, or other
materials provided pursuant to subpoena or furnished
voluntarily by an organization or individual (even if only
to photocopy and immediately return), the
Investigator/Auditor will give the organization or
individual a signed, itemized, and correctly dated Document
Receipt, EBSA Form 220A [Tab D], for the material. A copy of
the Document Receipt signed by the individual who gave the
materials to the Investigator/Auditor will be retained in
the case file.
e. Custody of Evidence. In order
to maintain a clear chain of custody of documentary
evidence, original materials must be preserved in their
original state in the RO/DO file. A History and Custody of
Documents record, EBSA Form 219 [Tab E], will be prepared
and maintained in the case file. See also Chapter 33,
paragraph 13, for guidance related to subpoenaed documents.
Upon return of the described documents to
the owner or responsible individual, the
Investigator/Auditor will ask for the return of the original
Document Receipt and have the party receiving the documents
acknowledge in writing such return. EBSA Form 220B Return of
Documents [Tab F] may be used for this purpose.
Under the following circumstances,
documents received during an investigation require
additional safekeeping.
1) Documents Obtained from the IRS.
Tax returns and return information received from the IRS
pursuant to IRC section 6103 must be maintained in a
secured manner. See Chapter 20, paragraph 7, for a
discussion of how to handle tax returns and return
information obtained from the IRS. Also see Chapter 12,
paragraph 31.d., and EBSA Notice 97-2.
2) Documents Covered by the Right to
Financial Privacy Act. The Right to Financial Privacy
Act, 12 U.S.C. §3401 et seq. (RFPA), preserves the
confidentiality of financial records while at the same
time allowing access for legitimate law enforcement
activities. Because there are certain prohibitions against
giving the documents to others, including other government
agencies, documents obtained pursuant to the RFPA should
be segregated from other documents produced during the
investigation. See Chapter 33, paragraph 14, for guidance
on obtaining documents pursuant to the RFPA.
3) Documents and Information
Obtained from the Grand Jury or During a Criminal
Investigation. Caution must be exercised when handling
parallel civil/criminal investigations. Criminal investigations cannot be used to
produce civil evidence. Documents related to a Grand Jury
investigation must be maintained in a secure place and may
not be disclosed to anyone who is not entitled to access
to the evidence under Rule 6(e) of the Federal Rules of
Criminal Procedure (the 6(e) order). See Chapter 20,
paragraph 8.b.; Chapter 33, paragraph 17; and Chapter 52,
paragraph 22.
4) Materials for which a FOIA
Exemption for Commercial Confidential Information Has Been
Claimed. The Investigator/Auditor should identify
materials that have been provided with a submitter's
request for FOIA Exemption 4 protection. These materials
should be maintained in a manner that will maintain their
identity. In addition, the case file should be clearly
marked that an Exemption 4 claim has been made. See
Chapter 20, paragraph 4.c.
5) Confidential Complaints.
Special procedures are necessary when an RO receives a
confidential complaint. See Chapter 30, paragraph 4.
6) Working Documents. During the
course of the investigation, the Investigator/Auditor may
keep a set of "working documents," that is, a
duplicate set of documents received which can be written
on and rearranged in any order. These working documents
should be destroyed when the investigation is completed
and the ROI is written, unless there is a compelling
reason to keep them.
f. Transmission of Evidence. All
documents and other material, which are or may become
evidence will be transmitted between offices in a secure
manner, which will maintain a clear chain of custody. The
transmittal memorandum will identify in detail the documents
or other material so transmitted.
g. Investigative Documentation.
This consists of the use and accumulation of completed or
otherwise indexed and identified forms, ROIs, RIs, signed
statements, exhibits, and other related documents as
prescribed in other sections of this manual. All record
examinations will be recorded on Report of Records
Examination, EBSA Form 202C [Tab G]. As noted above,
original documents should not be altered in any way. When
retaining copies of documents, each copy should be initialed
and dated upon receipt by the Investigator/Auditor. The
document should also be annotated to reflect the number of
pages it contains.
h. Administrative Documentation.
This is achieved by filing in respective investigative files
all memoranda, letters, teletypes, and other written
communications received. Any other instructions or
administrative data received personally or by telephone will
be recorded by handwritten notation, dated, and initialed by
the recipient, or by dated memorandum by or to the RD,
covering such details. Any action orally requested in a case
by the NO, SOL, or other office will be so recorded in the
case file.
i. Confidentiality of Information.
Active case investigative information will be discussed with
or made available only to personnel of EBSA, the Department,
or under proper circumstances, to other governmental
agencies. Circumstances under which material will be made
available to other agencies are discussed in Chapter 20.
j. Recording the Dissemination of
Investigative File Information. When any information in
an investigative file is furnished to any recipient outside
the RO by authority of the RD, either orally or in writing,
a memorandum to that effect, including specific information
and/or documents released, date of release and the initials
of the employee releasing the data, will be made and placed
in the file.
k. Multiple Copies of Investigative
File Material. While Investigators/Auditors may make and
use copies of documents, memoranda, exhibits, workpapers, or
other related materials during the course of an
investigation, these documents should generally be destroyed
at the conclusion of the investigation unless there are
compelling reasons to retain them. See Chapter 31, paragraph
5, and Chapter 33, paragraph 13.
From time to time, it is necessary for the
Investigator/Auditor to testify in court or at a deposition
concerning certain facts obtained during the investigation.
When this occurs, the Investigator/Auditor must rely on the
workpapers compiled during the investigation. Contemporaneous
books, papers, accounts, letters, affidavits, notes,
workpapers, spreadsheets, and like writings are regarded
highly by the courts. What witnesses say long after an event
has occurred may not be nearly as persuasive as what they said
in writing at or near the time the event occurred. For review,
operational, and management purposes, it is necessary that the
Investigator/Auditor maintain uniformity in the steps and
procedures utilized in the systematic presentation or storing
of records and financial data examined during the
investigation. This applies to all materials which form the
basis of reports produced by the Investigator/Auditor.
a. Basic Role of Workpapers. The
investigative workpapers serve as a connecting link between
the Investigator's/Auditor's report and the underlying
financial and other data which led to the findings contained
in that report.
b. Purposes of Workpapers. The
investigative workpapers serve a number of necessary
purposes such as:
1) Preservation of Significant Facts
and Relationships. Unless these matters are set down
in writing when observed, they are likely to be forgotten
before they can be properly appraised in the light of
information disclosed by other phases of the
investigation. As each phase is completed, the workpapers
are filed, expanded, and supplemented as additional
information is obtained.
2) Preparation and Verification of
the Report of Investigation. The workpapers should
substantiate and explain the facts and recommendations
included as well as justify the findings in the report.
c. Design of Workpaper. There are
any number of workpapers including schedules and
spreadsheets that may be used by an Investigator/Auditor.
When establishing the design of the workpaper or schedule,
the Investigator/Auditor should determine its adequacy by
testing it to see if it will accomplish the desired purpose.
Otherwise, much time can be lost through "false
starts" resulting from hasty use of untested workpapers
or schedules.
d. Types of Workpapers. Figure 1
is a listing of some categories of workpapers, illustrating
the natural flow of the investigation and the sequence of
indexing/referencing of workpapers.
e. Workpaper Preparation
1) Workpapers should be neat, legible,
and orderly in appearance. It is best to use only commonly
understood abbreviations. Generalities and unsupported
conclusions should be avoided and all comments and
exceptions should be factual. Final disposition of all
exceptions and questions should be stated.
2) Each page of each workpaper should
be initialed by every Investigator/Auditor working on it
and the date of the work should be indicated. This is
important in fixing the responsibility for work and in
showing the sequence in which work was done and the date
of completion in case questions are raised later. In
addition, each workpaper should include the source.
Including the source allows the reviewer to follow the
investigative trail to the original source documents.
3) All workpapers and schedules should
be indexed, and related workpapers and schedules should be
carefully cross-referenced. Unless the supervisor
gives directions to the contrary, each
Investigator/Auditor will select the method of indexing so
long as the method is used consistently throughout the
workpapers. The purpose of indexing is to make the finding
of data in the workpapers easy and to show the
interrelationship of related workpapers.
4) The following rules must be observed
in the preparation of schedules:
a) Each schedule should provide for
an analysis or summary of the data making up the item
and should describe the audit steps performed in
determining the reliability of the information.
b) Each schedule should be complete
and understandable in itself. This rule is directed at
saving the time of the reviewer and at ensuring that
schedules contain sufficient information to constitute
effective evidence of the work done. To be complete and
understandable, the schedule should have a complete
title of the information analyzed or of the test being
applied, the source of the data used, and the date or
period covered by the test. Any test procedures applied
should be described in terms of their nature and extent,
including methodology employed.
c) The interrelationship between
schedules is illustrated by the following example: If,
in making an analysis of the balance of the accounts
receivable account, it is determined that certain
accounts must be written off as uncollectible and
charged against the "provision for doubtful
accounts" (or the "reserve for bad
debts," as it is still commonly called), a cross-reference
should be made between related schedules so that the
reviewer can follow the relationships. Likewise, a word
of explanation should be included on the reserve for bad
debts analysis indicating that the entry ties into the
accounts receivable schedule. The reviewer has a
complete explanation of the adjustment and an
identification of the related schedule, which may be
examined to determine how it has been taken into
consideration.
f. Control of Workpapers.
Workpapers and supporting documentation should be secured
whenever an Investigator/Auditor leaves his or her work
area. The extent of such security measures is that
considered necessary in light of existing circumstances in
the judgment of the Investigator/Auditor.
g. Screening and Storage of Notes and
Workpapers. After the ROI has been prepared and
approved, all relevant original workpapers prepared by the
Investigator/Auditor during the course of the investigation
should be retained with the case file. (This workpaper file
may be used at a later date to refresh the
Investigator's/Auditor's recollection as a trial witness).
The Investigator/Auditor should exercise care to ensure that
no personal memoranda or other extraneous notations are
included among the workpapers.
The list illustrates how easily the program
may be expanded or contracted as deemed necessary in the
judgment of the Investigator/Auditor.
