Fraud Risk and Internal Controls Assessment

As internal auditors and business risk consultants for multi-national corporations, we identify process and internal control weaknesses that can lead to fraud or abuse and recommends operational improvements. Identifying areas of financial risk is only the first part of an engagement. We not only identify and evaluate areas of risk but also recommend management and control systems to minimize it in the future.

Bribery, Corruption, Bid Rigging and Kickbacks
  • Investigation of conflicts of interest between local business owner and elected official. (Government)
  • Investigation of alleged kickbacks in connection with overseas construction projects. (Construction)
  • Investigation of alleged kickbacks and conflicts of interest at a chemical manufacturing company. Recommendations resulted in improvements of internal controls, and terminations of relationships with questionable and suspicious contractors and suppliers. (Manufacturing)
  • Forensic Due Diligence in connection with an acquisition by a Fortune 20 healthcare provider, in response to findings of illegal payments under the Foreign Corrupt Practices Act of 1977, resulting in a decrease of $300 million in the acquisition price. Used forensic data mining tools to detect further questionable payments and relationships at the target’s domestic operation, resulting in termination of contractor / vendor relationships. Managed a team of 7 professionals, and coordinated efforts with no less than 10 other professionals. (Hospitals & Healthcare)
  • Forensic accounting investigation, in coordination with the Office of the District Attorney and Grand Jury, relating to depletion of a fund balance of more than $20 million, for a municipality with annual budget of $85 million. Identified transactions indicating potential corruption activity, including bribery, kickbacks, and bid rigging, as well as money laundering and ghost employees. Referred case findings to United States Attorney’s Office, which attracted interest from five federal agencies, to continue investigation at the Federal level. (Government)
  • Forensic Accounting Analysis regarding misapplication of over-spent budgeted programs, in response to Congressional inquiry. Findings reports issued internally to the research agency, and to United States Congress. (Government)
  • Investigation of alleged vendor fraud, kickbacks and tax evasion. (Energy & Environmental)
  • Investigation of unethical business practices in connection with contractual arrangement with vendors. (Professional Services)
Change Order Abuse
  • Capital expenditures made prior to authorization, indicating override of internal controls of capital approval process, or potential bid rigging, kickbacks, or preferential vendor treatment ($815K) . (Manufacturing)
  • Capital projects not regularly monitored, denoting exposure to over-spent contracts, kickbacks, change order abuse, and/or bid rigging ($114 Million). (Manufacturing)
Embezzlement, Employee Theft & Abuse
  • Investigation of the Chief Financial Officer of multi-national computer accessories company for embezzlement of $25 million. Assisted U.S. Attorney, FBI and IRS in forensic analysis for criminal indictment, which included 15 counts of wire fraud, and 10 counts of money laundering. Also advised investment banking firm in calculation of civil damages and financial restatement. (Technology)
  • Investigation and forensic accounting analysis of fraudulent use of a multi-national Fortune 200 company retirement and pension program. (Transportation & Logistics)
  • Investigation of former Chief Financial Officer, for alleged embezzlement of more than $400,000. (Real Estate Development)
  • Investigation of the former Vice President of a privately-owned hospital, for using the hospital’s capital projects fund to construct his personal residence, at a cost of approximately $900,000, and a total estimated theft of $1.9 million. In addition to assisting legal counsel with civil aspects of the case, worked in conjunction with state and local law enforcement, to prepare the case for criminal prosecution, and arrest of co-conspirators. (Hospitals & Healthcare)
  • Investigation of embezzlement, forgery and risk of workplace violence. Coordinated with forensic handwriting examiner. (Not-for-Profit)
  • Investigation of former directors of the Brazilian subsidiary of a Fortune 25 American bank, for embezzlement of $32 million. The embezzlement and related asset overstatement resulted in a falsely inflated purchase price paid by the American bank in acquiring the Brazilian subsidiary bank. The acquisition overpayment was approximately $15 million, in addition to the initial embezzlement. Performed financial analysis and prepared expert witness affidavit for counsel. Affidavit was later used in prosecution of the case by law enforcement authorities in Brazil, British Virgin Islands, Cayman Islands, and Bahamas. Managed a team of 15 professionals, and coordinated efforts of no less than 20 other professionals. (Banking & Financial Services)
  • Investigation of allegations of mortgage fraud and employee theft. (Banking & Financial Services)
Fictitious / Overstated Assets and Revenue
  • Investigation and forensic accounting analysis of embezzlement of construction loan proceeds. (Construction)
  • Current assets for a single division overstated, and not reconciled with balance sheet, indicating exposure to overstated revenue or understatement of expenses. (Manufacturing)
  • Uncollected sales invoices older than 60 days, indicating exposure to skimming or inflated / fictitious revenues. (Manufacturing)
  • Assets listed on fixed asset ledger, which were no longer in existence. (Manufacturing)
  • Accounts receivable older than 60 days, indicating ineffective collection procedures and exposure to skimming and/or inflated / fictitious revenue ($7.7 Million). (Manufacturing)
  • Inefficient cash application, resulting in unapplied cash receipts ($2.8 Million). (Manufacturing)
Inflated Payroll Salary, Rates and Hours
  • City-wide internal controls risk assessment. Identification of risk for payroll fraud and lost revenue. (Government)
  • Investigation of falsely reported hours and acceptance of unauthorized compensation. (Government)
Lack of Controls over Inventory and Fixed Assets
  • Process inefficiencies in monthly financial closing, inventory management, and sales and production forecasting processes for a global manufacturer of tractors and farm machinery. (Manufacturing)
  • Inventory shipments from suppliers that were 50% less than their reported amounts. (Manufacturing)
  • Investigation and controls risk assessment of fraudulent credits to debit cards. (Transportation & Logistics)
  • Internal controls risk assessment for colleges within the University System of Georgia. (Government)
Overspent Contracts & Budgets
  • Ineffective reconciliation and monitoring processes for $400 million construction program of a private university. (Construction)
  • Capital projects that overspent authorized limits, revealing circumvention of corporate policy. (Manufacturing)
  • Capital projects that overspent authorized limits, in connection with $65 million local option sales tax. (Government)
Preferential Treatment of Vendors
  • Control weaknesses and exposure to fraud risk at three locations of an automotive and industrial battery manufacturer, including purchasing, accounts payable and receiving. (Automotive)
  • Forensic data analysis for multi-million dollar distribution firm, in response to Sarbanes-Oxley compliance. (Transportation & Logistics)
Understated Assets & Revenue
  • Series of forensic audits for a national franchisor of hotels, involving underpayment of franchise fees, resulting in identification of under-reporting of hundreds of thousands of dollars in revenue. (Hospitality & Entertainment)
  • Franchising: Forensic accounting analysis in defense and risk mitigation in connection of tax evasion allegations. (Hospitality & Entertainment)
  • Expensed items for which corporate policy requires capitalization. (Manufacturing)
  • Income understatement, resulting from inventory valuation errors. Provided new formula for calculating mass storage inventory. (Manufacturing)