Contract review and Asset tracing

Presented by Group 4

Name Registration No.

Pamela Mpunzi R218412A
Daphne Chakadenga R218692L
Moreblessing Mudzviti R213821E
Tatenda A Mupfumi R218440S
Lysias A Marire R218459V
Yolanda S Musungwa R204330F
Tadiwanashe Bopoto R218517Z
Kudzwaishe M Kagodora R218492Q
Cathbert T Munedzi R218449A

ASSET TRACING
What is Asset Tracing?
 An asset is a broad term used to describe anything that has current or future
economic value to an individual or business.
 Assets are often things (tangible or non-tangible) that you own and that you can
sell or transfer for cash (although cash is also considered, an asset in its own
right).
 In a tracing capacity, personal asset can include financial securities, company
ownership, real estate, motor vehicles, jewellery, artwork, gold, silver, and even
digital assets such as cryptocurrencies.
 Asset tracing is a catchall term used to describe the processes and techniques
investigators use to locate assets that may have been legitimately appropriated
(but need to be identified to assist litigation), or to identify stolen or
misappropriated assets.
 These could belong to a corporate entity or a private individual.
Steps involved in asset tracing
1. Gather financial documents and data:
- Bank statements
- Investment accounts
- Tax returns
- Business records
2. Analyze financial transactions:
- Identify suspicious or unusual transactions
- Look for patterns or anomalies
3. Identify potential asset hiding techniques:
- Shell companies
- Offshore accounts
- Nominee accounts
- Cryptocurrencies
4. Follow the money trail:
- Track transactions to identify asset movement
- Identify intermediaries or accomplices
5. Use data analytics and visualization tools:
- Identify connections between entities and transactions
- Visualize complex financial relationships

1
6. Conduct interviews and gather additional evidence:
- Witness statements
- Documents from third-party sources
7. Document and report findings:
- Prepare a detailed report outlining the asset tracing results
- Provide recommendations for further investigation or recovery actions
When is it used?
 Asset tracing is often used in litigation when a party believes that assets have
been wrongfully taken, concealed, or transferred in an attempt to avoid legal
obligations or judgments. This may include cases such as:
i. Fraud: When a party has been defrauded, asset tracing can be used to identify the
location of assets that have been misappropriated or concealed.
ii. Divorce: Asset tracing can be used in divorce cases to identify assets that have
been hidden or transferred in an attempt to avoid equitable distribution.
iii. Bankruptcy: In bankruptcy cases, asset tracing can be used to identify assets that
should be included in the bankruptcy estate.
iv. Intellectual Property Infringement: In cases of intellectual property infringement,
asset tracing can be used to identify assets that may be used to satisfy a judgment or
settlement.
v. Breach of Contract: When a party has breached a contract, asset tracing can be
used to identify assets that may be used to satisfy a judgment or settlement.
Issues and concerns
 Every case is unique, and every asset tracing investigation is also different. It can
be difficult to predict at the outset of an investigation the nature, extent and
complexity of an investigation, and the direction it will take. However, working
closely with the client and the legal team will ensure that a clear and focused
strategy is taken, keeping costs to a minimum and identifying and minimising
pitfalls and hurdles as they arise.
 There are some important considerations, and limitations, to highlight and these
should be borne in mind from the outset. This is not exhaustive, however these
are common areas to be aware of when considering locating and recovering
assets:
i. Jurisdiction

2
In most cases involving asset tracing, this involves multiple jurisdictions. Each
country has its own rules and challenges – some are open and transparent, others
deliberately opaque. For example, the amount of information available in the United
Kingdom, and that of offshore countries, is vastly different.
Furthermore, countries vary considerably in their assistance to courts; for example,
assets located in Russia would be unlikely to be recoverable.
Careful consideration will be required from the outset of an investigation, to decide
which jurisdictions to focus on.
ii. Hidden assets
In many cases, fraudsters, or individuals aware of impending litigation, take great care
to move or conceal their assets. This can involve moving money into offshore
accounts, purchasing property using company details, or keeping assets in the names
of close family members. It should be highlighted that often hidden assets are beyond
the reach of conventional enquiries, or even that of law enforcement.
Working closely with specialist lawyers, who can obtain court orders for additional
disclosure, can be crucial to identifying additional information, however this can be a
time consuming, and potentially costly process.
iii. Personal data
Clients often wish to understand what funds an individual has in their bank account,
or other specific personal information, such as pensions, trusts, and other financial
arrangements. In most jurisdictions, this information is simply not available – to
obtain this information without requisite court orders would, in most cases, be illegal.
However, in some jurisdictions pertinent information (such as banks associated with
an individual) can be obtained, or forensic accountancy on client’s accounts can
identify the destination of stolen funds.
In many cases, close liaison with specialist lawyers, who can make court applications
to obtain additional details, bank statements and freeze stolen funds, will be required.
Understanding the limitations of an investigation, and also the possible routes
available, is an important consideration.
iv. Legality
This is closely linked with the above point, however all enquiries must of course be
within the legal constraints of the relevant jurisdiction. Evidently, the law changes
considerably depending on the country where an investigation is taking place – the
best stance when considering litigation is to assume the legal position of the country,

3
and ensure investigations are conducted accordingly and to the highest standards of
integrity and ethics. This also ensure the admissibility of key evidence, and that this
can be relied upon in court.
Techniques used in asset tracing
1. Financial statement analysis
2. Transaction testing and verification
3. Data analytics and visualization
4. Document review and analysis
5. Interviews and witness statements
6. Online research and social media analysis
7. Network analysis and link charting
Tools used in asset tracing
1. Financial analysis software(e.g., Excel, Audit Command Language)
2. Data analytics platforms (e.g., Tableau, Power BI)
3. Document management systems
4. Online research tools (e.g., Google, LexisNexis)
5. Social media analysis tools (e.g., Hootsuite, Brand24)
Benefits of asset tracing
1. Recovery of misappropriated assets
2. Identification of financial wrongdoing (e.g., embezzlement, money laundering)
3. Prevention of future asset misappropriation
4. Improved financial transparency and accountability
5. Enhanced reputation and credibility

A case of asset tracing:

Astro Mobile, a Zimbabwean mobile phone company, was involved in a fraud case
where the company’s directors allegedly siphoned off $2.7 million through fake
invoices and shell companies.

Asset tracing played a crucial role in this case:

1. Investigators identified suspicious transactions and followed the money trail.

2. They uncovered a network of shell companies and bank accounts linked to the
directors.

4
3. Asset tracing revealed that the funds were laundered through various accounts and
used to purchase properties and luxury vehicles.

Through asset tracing, investigators were able to:

1. Freeze assets and bank accounts linked to the fraud.
2. Recover some of the misappropriated funds.
3. Bring the perpetrators to justice.

This case highlights the importance of asset tracing in combating fraud and corruption
in Zimbabwe.

CONTRACT REVIEW
Definition
 Contract
A legally binding agreement between two or more parties where by legally
binding means it is enforceable by law , thus in the event that a dispute arises
between contracting parties , the parties may take up the issue to the courts of
law.
 Contract review
It is a forensic accounting technique used to examine and analyze contracts for
potential financial misstatements, irregularities, or fraud. Therefore, contract
review is the process of thoroughly examining a contract looking at whether it
contains basic elements of a contract such as offer, acceptance, consideration,
authority and capacity and the intent to create legal relations amongst other
things.
Purpose
1. Identify potential financial misstatements or irregularities
2. Detect fraudulent activities, such as corruption, bribery, or embezzlement
3. Evaluate contract compliance with laws, regulations, and company policies
4. Assess financial exposure and potential losses

Steps involved in contract review

 Gather contracts documents

5
 The documents that, together, comprise the building contract are often
collectively referred to as the contract documents. The contract documents
will usually include the conditions of contract, the employer’s requirements,
the contractor’s proposals, the specification and the contract sum analysis or
bills of quantities. Documents may include the contract itself, title deeds when
dealing with leases, operational licenses, state laws amongst many others
depending on the business being traded

 Review contract terms, conditions, and clauses

This is where elements of a contract can be scrutinized:
1. Offer
Forensic accountants may review whether there was an offer made by one
party to another. It is a promise by one party to enter into a bargain with the
other person. It involves someone with a desire for goods or services and
someone who can fulfill the responsibility of providing it.
2. Acceptance
This is agreement to specific conditions of an offer and it must be unequivocal
meaning leaving no doubt that one agrees to the offer
3. Consideration
This is what each party promises to bring on the table to form the contract for
example between an employer and employee the consideration by the
employer is offering a job and remuneration whilst the consideration brought
about by the employee is working as described by contract on job description.
4. Intent to create legal relations
To show seriousness a contract must legally bind. This can be shown for
example in a documented contract there can be statement like “I Tinotenda
Scott I agree to...” or a statement “This contract is binding on the parties”
5. Authority and Capacity
This reviews on whether the parties involved are qualified enough to get into
contract by being of legal age, in mental capacity of understanding terms and
conditions, availability of resources and power of providing those resources.
For example in a lease agreement between landlord and tenant the landlord
can provide title deeds to tenant which can confirm power to rent out property.
 Analyze contract pricing, payment terms, and delivery schedules

6
  Evaluate contract amendments, changes, or extensions
 Identify potential red flags, such as:
- Unusual payment terms or amounts
- Lack of clear contract scope or deliverables
- Inadequate or missing contract documentation
- Unexplained changes or amendments
 Investigate and document findings
 Report results to management, audit committee, or regulatory bodies

Techniques used in contract review

1. Document review and analysis:
Carefully examining the contract terms, conditions, and clauses to understand
obligations, risks, and opportunities. This can be done manually where people of
expertise like forensic accountants or attorneys read the contract line by line
understanding what each text implicates or make use of contract review softwares
such as JURO artificial intelligence review software which are more efficient and
effective.
2. Interviews with contract parties, employees, or vendors:
Gathering insights and clarifications from those familiar with the contract, its
negotiation, or its execution, to understand whether contracting parties understand the
contract obligations at the same degree of extent.
3. Financial statement analysis:
Reviewing financial records to understand the contract's economic implications,
identify potential risks, and ensure alignment with financial goals.
4. Transaction testing and verification:
Validating contract terms by testing and verifying specific transactions or scenarios to
ensure compliance. For example in contracts that conclude over a period of time such
as in construction, forensic accountants can assess progress and transactions made
whether it is in compliance with the contract.
5. Data analytics and visualization:
Applying data analysis and visualization techniques to identify trends, patterns, and
insights within the contract data. For example analyzing signatures on contracts using
soft wares like Parascript that provides automated signature verification software that
protects against fraud.

7
6. Industry research and benchmarking:
Researching industry standards, best practices, and benchmarks to evaluate the
contract's terms, pricing, and conditions. That is to compare whether the contract is up
to standard.

Common contract review tools

1. Contract management softwares
2. Document management systems
3. Data analytics platforms
4. Spreadsheet software (e.g., Excel)
5. Forensic accounting software (e.g., Audit Command Language, IDEA)
Benefits of contract review
1. Improved financial transparency and accountability
2. Enhanced contract compliance and risk management
3. Detection and prevention of financial misstatements and fraud
4. Reduced financial exposure and potential losses
5. Improved business relationships and reputation
6. Better risk management
7. More effective third-party agreements
8. Improved operational efficiency
9. Reduced legal costs
10. Safeguarding interests and ensuring fair contractual relationships
When is it used?
1. Contract Renewal: Before renewing a contract, review its terms to ensure they still
align with your needs.
2. Contract Termination: Review the contract to understand obligations and potential
penalties when ending a contract.
3. Mergers and Acquisitions: Review contracts during M&A activity to understand
liabilities, obligations, and potential risks.
4. Audits and Compliance: Conduct regular contract reviews to ensure compliance
with laws, regulations, and organizational policies.
5. Dispute Resolution: Review contracts to resolve disputes or misunderstandings
with vendors, partners, or clients.

8
6. New Contract Negotiation: Review existing contracts to inform negotiations for
new contracts.
7. Change in Business Needs: Review contracts when business needs change to
ensure they still align with new requirements.
8. Change in Law or Regulation: Review contracts when laws or regulations change
to ensure compliance.
9. Contract Breach: Review contracts when a breach occurs to understand obligations
and potential remedies.
10. Regular Contract Management: Regularly review contracts to ensure they remain
effective, efficient, and aligned with business objectives.
Issues and concerns of contract review
1. Ambiguity and Unclear Terms: Unclear or ambiguous language can lead to
misunderstandings.
2. Inadequate Risk Allocation: Contracts may not adequately address risk, leading to
unforeseen liabilities.
3. Non-Compliance: Contracts may not comply with laws, regulations, or
organizational policies.
4. Inconsistent Terms: Contracts may contain inconsistent terms or conflicting
provisions.
5. Outdated or Obsolete Terms: Contracts may contain outdated or obsolete terms that
no longer apply.
6. Lack of Clarity on Obligations: Contracts may not clearly outline obligations,
leading to confusion.
7. Inadequate Termination Clauses: Contracts may not have clear termination clauses,
making it difficult to exit.
8. Unfavorable Payment Terms: Contracts may have unfavorable payment terms,
affecting cash flow.
9. Insufficient Indemnification: Contracts may not provide sufficient indemnification,
leaving parties exposed.
10. Lack of Flexibility: Contracts may not allow for flexibility or adjustments as
circumstances change.
11. Poorly Defined Deliverables: Contracts may not clearly define deliverables,
leading to misunderstandings.
12. Inadequate Dispute Resolution: Contracts may not have clear dispute resolution

9
processes, leading to conflicts.
13. Unrealistic Expectations: Contracts may contain unrealistic expectations or
timelines.

Benjamin Nyakudya, a Zimbabwean businessperson, was involved in a fraud case

where he allegedly misrepresented his company’s capacity and experience to win a
$1.5 million contract with the Zimbabwe National Roads Administration (ZINARA)
for road maintenance.

Contract review case revealed:

1. Nyakudya’s company, Benedict Nyakudya Consulting Engineers, lacked the
necessary qualifications and experience.
2. The contract terms were overly favorable to Nyakudya’s company.
3. Inflated prices and suspicious payment structures.

Through contract review, investigators uncovered:

1. False representations and misstatements.
2. Lack of due diligence by ZINARA.
3. Unusual relationships between Nyakudya and ZINARA officials.

The contract review process helped expose the fraudulent activities, leading to:
1. Contract termination.
2. Recovery of misappropriated funds.
3. Criminal charges against Nyakudya and involved officials.

This case emphasizes the importance of thorough contract review in preventing fraud
and ensuring accountability in Zimbabwe’s public sector.

10
REFERENCES

Albrecht, W. S., and Albrecht, C. O. (2003). Fraud examination and forensic

accounting: Emerging trends. Journal of Forensic Accounting, 4(1), pp.1-12.
(Section 4: Contract Review)

Another day. (2023). Asset Tracing: Everything you need to know. Available at:
https://www.another-day.com/resources/asset-tracing-everything-you-need-to-
know (Accessed: 4 September 2024)

Crumbley, D. L., Heitger, L. E., and Smith, G. S. (2016). Forensic and

investigative accounting. CRC Press.

Global Investigations. (n.d). Common Asset Tracing Techniques. Available at:

https://www.globalinvestigations.co.uk/asset-tracing/common-asset-tracing-
techniques/ (Accessed: 4 September 2024)

LexisNexis Construction 2024, Contract Documents definition

https://juro.com/learn/contract-review#:~:text=process%20more%20efficient
%3F-,What%20is%20contract%20review%3F,by%20using%20contract
%20automation%20software (Accessed 3 September 2024)

Singleton, T. W., and Singleton, A. J. (2010). Contract review and analysis in

forensic accounting. Journal of Forensic Accounting, 11(1), pp. 1-14.

11