Audit Evidence & Documentation
Making records of non-standard financial transactions is not easy.
Electronic trading platforms for nonstandard transactions are numerous and diverse. They change constantly. They facilitate trades and auctions in myriad nonstandard financial assets, such as OTC derivatives, bankruptcy claims, privately-held equity, esoteric asset-based securities and so on. An example of such a platform is SecondMarket, which specializes in bringing together buyers and sellers of illiquid assets.
Multiple Media and Services
The platforms provide information in multiple media, including audio, video, formatted documents, instant messages, structured data and augmented reality. These platforms can present a professional trader a welter of financial disclosures, trade confirmations, legal representations, and contract terms and conditions.
The relevant contract data for a trade may not arrive all through a single platform. A trade executed on one platform may be supported by emails or text messages sent through different services.
Are All Records Linked Together So Someone Can Understand Them Five Years From Now?
After a trade has been executed, how can the terms be documented? If there were a dispute about the trade, will reliable and complete records exist?
Lawyers ask these questions, thinking about legal evidence. Auditors ask these questions, thinking about proof to support financial claims and statements. Tax advisors ask these questions as they analyze tax obligations and prepare for audit.
Although a platform provider like SecondaryMarket may keep some records, the provider cannot be relied upon as the long-term, comprehensive, record repository for investors. The provider might go out of business, and it might not keep all of the records the investor needs for the number of years the investor needs them.
Further, the provider may not keep records to show the precise organization of information, or the order in which communications were exchanged, or the interconnection of messages communicated via different media and services – all of which could be relevant to determining the legal import of a transaction.
Narrated Screencast Video
Here is a method for recording the data a professional sees at a certain point in time, such as half-an-hour after a trade is executed.
It is a screencast video that memorializes what the professional claims he sees, with realtime narration from him explaining how he moves from one item of information to the next.
The screencast is made with screencast-o-matic, a free, Java-based, open-source tool for recording what you see on your screen,
Interactivity and Inter-Connections
The resulting video is a unified package of evidence that captures the interaction and interconnectedness of the web better than a bunch of sceenshots. The video illustrates what happens as each link is clicked.
The final, comprehensive record of the transaction might include this video, together with copies of emails, the disclosure documents that were exchanged and so on. The video is the twine that binds all of these records together into a unit that is comprehensible to someone who may review the transaction in the future.
Cloud Time Stamp
Fixing the time of evidence like this video adds to its credibility. The auditor states the time directly into the video.
To corroborate the vocalized date, the auditor could store the video, soon after he creates it, in a file-management resource that applies a timestamp to it and to any modifications of it.
Thus, if the video, dated by the auditor’s voice as November 5, were uploaded on November 5, but then replaced November 10, there would be a mismatch of dates, suggesting that the video in the resource is not the one originally created by the auditor.
What enterprise-class resources might reliably attach a timestamp to a video? Autonomy is an example of a third-party archive service providing such a timestamp, and Microsoft Sharepoint is an example of in-house resource. Sharepoint maintains rich, detailed metadata (such as time of file upload and time of file modification) that is hard for anyone, even IT staff, to manipulate inconspicuously.*
–Benjamin Wright
Attorney Wright teaches the law of data security and investigations at the SANS Institute.
*Footnote: Manipulation of all relevant metadata (including metadata in backups) in a complex enterprise resource like Sharepoint is extremely challenging, if not utterly impractical. Thus, the timestamp in that resource corroborates the time stated in the video. A tool like DocAve Auditor accesses and analyzes the trove of metadata in Sharepoint.
Update: Some Bitcoin traders recommend making a screen video of their wallets to prove they sent Bitcoins to a particular recipient.
Related Articles:
* Online Investigation
* Recording Cyber Adversary
* Using Electric Network Frequency (ENF) analysis to confirm the credibility of an electronic legal recording.
Making records of non-standard financial transactions is not easy.
Electronic trading platforms for nonstandard transactions are numerous and diverse. They change constantly. They facilitate trades and auctions in myriad nonstandard financial assets, such as OTC derivatives, bankruptcy claims, privately-held equity, esoteric asset-based securities and so on. An example of such a platform is SecondMarket, which specializes in bringing together buyers and sellers of illiquid assets.
Multiple Media and Services
The relevant contract data for a trade may not arrive all through a single platform. A trade executed on one platform may be supported by emails or text messages sent through different services.
Are All Records Linked Together So Someone Can Understand Them Five Years From Now?
After a trade has been executed, how can the terms be documented? If there were a dispute about the trade, will reliable and complete records exist?
Lawyers ask these questions, thinking about legal evidence. Auditors ask these questions, thinking about proof to support financial claims and statements. Tax advisors ask these questions as they analyze tax obligations and prepare for audit.
Although a platform provider like SecondaryMarket may keep some records, the provider cannot be relied upon as the long-term, comprehensive, record repository for investors. The provider might go out of business, and it might not keep all of the records the investor needs for the number of years the investor needs them.
Further, the provider may not keep records to show the precise organization of information, or the order in which communications were exchanged, or the interconnection of messages communicated via different media and services – all of which could be relevant to determining the legal import of a transaction.
Narrated Screencast Video
Here is a method for recording the data a professional sees at a certain point in time, such as half-an-hour after a trade is executed.
It is a screencast video that memorializes what the professional claims he sees, with realtime narration from him explaining how he moves from one item of information to the next.
The screencast is made with screencast-o-matic, a free, Java-based, open-source tool for recording what you see on your screen,
Interactivity and Inter-Connections
The resulting video is a unified package of evidence that captures the interaction and interconnectedness of the web better than a bunch of sceenshots. The video illustrates what happens as each link is clicked.
The final, comprehensive record of the transaction might include this video, together with copies of emails, the disclosure documents that were exchanged and so on. The video is the twine that binds all of these records together into a unit that is comprehensible to someone who may review the transaction in the future.
Cloud Time Stamp
Fixing the time of evidence like this video adds to its credibility. The auditor states the time directly into the video.
To corroborate the vocalized date, the auditor could store the video, soon after he creates it, in a file-management resource that applies a timestamp to it and to any modifications of it.
Thus, if the video, dated by the auditor’s voice as November 5, were uploaded on November 5, but then replaced November 10, there would be a mismatch of dates, suggesting that the video in the resource is not the one originally created by the auditor.
What enterprise-class resources might reliably attach a timestamp to a video? Autonomy is an example of a third-party archive service providing such a timestamp, and Microsoft Sharepoint is an example of in-house resource. Sharepoint maintains rich, detailed metadata (such as time of file upload and time of file modification) that is hard for anyone, even IT staff, to manipulate inconspicuously.*
–Benjamin Wright
Attorney Wright teaches the law of data security and investigations at the SANS Institute.
*Footnote: Manipulation of all relevant metadata (including metadata in backups) in a complex enterprise resource like Sharepoint is extremely challenging, if not utterly impractical. Thus, the timestamp in that resource corroborates the time stated in the video. A tool like DocAve Auditor accesses and analyzes the trove of metadata in Sharepoint.
Update: Some Bitcoin traders recommend making a screen video of their wallets to prove they sent Bitcoins to a particular recipient.
Related Articles:
* Online Investigation
* Recording Cyber Adversary
* Using Electric Network Frequency (ENF) analysis to confirm the credibility of an electronic legal recording.
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