| Company: | Distribution company on the east side of Houston. | Company: | Houston based manufacturer's distribution company |
| Client Profile: | 100+ employees - Many employees have been with the company since the formation 25+ years ago. | Client Profile: | 50+ employees in two states. |
| Project: | All transactions and processes that the controller touched was initiated. This investigation covered four years of accounting transactions including accounts payable, fixed assets, payroll, petty cash, and travel expenses. | Project: | Forensics / fraud investigation to determine the extent of the theft and to provide appropriate documentation to aid the district attorney in the prosecution of the individual. |
| Need: | Company leadership received an insider tip that the controller was using a company-issued credit card for personal use. The company's CFO contacted PKF Texas regarding a complete investigation of the controller's activities. At the request of the CEO, we reviewed transactions involving the entire management team to ensure the fraudulent activity did not reach beyond the controller. | Need: | Owner of the company had indications through an outside audit that the Vice President of Finance may have been stealing company funds. The employee was in a trusted position and through deceit and cover-up has been paying themselves additional bonuses through payroll and issuing checks to in their name. |
| Solution: | The engagement determined that the controller had misappropriated $225,000 over five years through concealment and taking advantage of a weak internal control environment. Due to the controller's tenure with the company, there was a large amount of trust in this person by company management and employees. The company had insurance coverage for employee theft and our thorough investigation and documentation allowed the company to recoup 100% of their losses. We also made recommendations to significantly improve their internal control environment to reduce the opportunity for fraud in the future. | Solution: | It was determined through our forensics investigation that the employee was indeed taking company funds. The employee took $45,000 from the company over a period of one and one-half years. We worked with the outside counsel to document the findings, so the employee could be prosecuted by the local district attorney. We recommended specific changes and additions to their internal controls to reduce the likelihood of this type of fraud occurring again within this company. |
