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Fraud Investigation Recovers 100% of Losses

Fraud Investigation Recoups 100% of Losses for Distributor

Distribution company on the east side of Houston. 100+ employees - Many employees have been with the company since the formation 25+ years ago.

  • Fraud Investigation
  • Internal controls
  • Solution & Benefits
  • Needs

This investigation covered four years of accounting transactions including accounts payable, fixed assets, payroll, petty cash, and travel expenses. All transactions and processes that the controller touched were included.

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.

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.

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