Case Study: Manufacturing Company Embezzlement

Overview

Decosimo was engaged by a manufacturing company’s attorney to assist with the investigation of suspected embezzlement at the company after the controller had found several unauthorized checks recorded in the accounting records.  During the discussion, the office manager admitted to the controller that (s)he had prepared the checks and recorded entries. 

Client Objectives

After discussing the matter with the company’s attorney, both the company and the attorney felt that further investigation was needed prior to determining what additional actions would be required.

Maximizing Value

Our forensic investigation not only provided the evidence needed by the company’s attorney for further legal action, but we also provided the company’s insurance company detailed documentation of the losses incurred due to the embezzlement.  Also our investigation led to the discovery of several weaknesses within the company’s internal control structure, allowing the company to focus on strengthening its internal control framework thus reducing the company’s exposure to future fraudulent activity.

Disciplined Process

We began by obtaining and understanding of the accounting procedures in place and the responsibilities performed by the accounting staff and performing various preliminary analyses of the accounting data.  During our interview with the office manager, we determined that the practice of recording unauthorized checks had been going on for several years.

We imaged the hard drive of the office manager for analysis of deleted worksheet files and emails.

Next, we extracted various accounting financial records and data from the company’s financial reporting package and a pattern emerged showing questionable disbursements to multiple vendors.  We compared information in the accounting records to the actual checks clearing the bank.

Proven Results

We were able to identify and present as evidence to the company’s attorney almost $500,000 in embezzled funds.  Our documentation served as valuable litigation support that also assisted in his successful prosecution of the office manager and assisted in the company’s successful insurance claim.

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