Case Studies

• Fraud Limited
• Margins Limited
• Bouncing Baby Limited
• Out of Control Limited

  Fraud Limited

  We were asked by management to investigate a company that despite making €140k profit did not see this reflected in the bank balance at year end.

  

  We initially reviewed the accounts, conducting various Forensic ratio analysis combined with debtor and creditor balance reviews. The margins were declining so we focused in on the creditors’ ledger. We noted that many supplier accounts were not being reconciled, payments were not being allocated and also some creditor accounts had negative balances. We commenced reconciliations and noted that some payments to suppliers were not being received by them despite the cheque stub stating who the payee was.
  
  

  We requested copy cheques from the bank and discovered that over an 18 month period a trusted employee had been making the cheques out to themselves yet recording the on the stubb as payment to the supplier. This fraud was made all the easier as management would often pre-sign cheques. The employee was suspended and appropriate disciplinary action taken.

  Once the fraud was discovered via Forensic Accounting tecniques we immediately requested that the company ensure all cheques require two signatures and that regular supplier reconciliations were carried out.

   

  Margins Limited

  

  We were contracted to a new client to produce management accounts and prepare a monthly report for board meetings. While as outsourced accountants we were not involved in the compilation of information for sales invoicing and relied on management’s high level of involvement in this process to ensure that completeness and accuracy was being achieved.
  

  After several months we noted that margins were falling, despite a significant increase in turnover. The business is labour intensive and subject to union rates. We conducted a Forensic Accounting analysis of revenues and costs for various periods and determined that while the staff ensured they got paid for the correct hours and at the correct rates of pay, the premium for overtime / unsociable hours was not being factored into the billing to customers.
  

  We produced an Expert Witness Report and recommended that all billing was carried out in conjunction with a review of wage costs to ensure margins are maintained.

   

  Bouncing Baby Limited

  

  We were asked to provide maternity cover for a client as the acting Financial Controller. After 10 weeks the client advised that lady was taking a further 6 weeks leave which we able to provide ensuring that no loss of continuity was experienced.

  The original client is part of a large group and on 2 subsequent occasions in other companies we have taken temporary assignments as Financial Controller while they went through the process of identify and recruiting suitable replacements when people left at short notice.

  We also have taken on the outsourced management accounting function for a company within the group

   

  Out of Control Limited

  The Financial Controller of a not-for-profit organisation decided not to renew their contract after 2 years and the management asked us to prepare a report for the Board on this person, their role within the organisation and whether they had engaged in any unapproved financial activity. The person concerned refused to make themselves available for interview.

  

  As part of this Forensic Accounting assignment we interviewed senior management, members of staff, the direct reporting team, the auditors, the fund providers and staff of the outsourced Payroll Bureau.
  

  We carried out “walk through” tests on procedures as identified at the interviews as no procedures manual was available.
  

   

  We examined all material purchase invoices and focused on any approved by the FC.

  We reviewed all expense claims and credit card expenditure

  We reviewed all material bank payments and cheques.

  We compiled an Expert Witness Report for the Board stating that despite the scope limitations, we were unable to find any evidence of financial irregularities or fraud.

  The Board subsequently requested us to produce a more detailed report on the following:

  • Role of the Financial Controller with in the organisation
  • Internal Control weaknesses & recommendations
  • Whether to outsource the finance function and/or retain the outsourced payroll function