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Directors Who Fail To Keep Accurate Financial Records Face Bans

Member: Nifa

News earlier this month that a company director was disqualified from holding such a position for eight years for failing to keep full and accurate books and records should be a warning that acting in this manner will always be uncovered through a financial investigation by forensic accountants.  When a company fails, it is investigated by the Insolvency Service, whose forensic accounting team found in this case that the businessman was unable to satisfactorily account for the company’s financial dealings.

The man could not explain why £254,000 had passed through his business accounts, although the business was only showing a turnover of £36,000, or how assets worth £100,000 came to be transferred to his wife, who later sold them for £85,000.  In addition, while wages of more than £400,000 had been paid out, the firm made no PAYE payments for the two years prior to its failure and could not account for VAT.

The work undertaken by the forensic accountants is always thorough and detailed and, in this case, highlighted the poor record-keeping of the director but investigative accountants can also be used by creditors to trace assets that have been hidden deliberately to prevent them being paid.

In these cases the team will use fraud recovery techniques to ensure that uncooperative directors are brought to court under the provisions of the Insolvency Act 1986, so that the maximum amount of money can be found.  Using sophisticated software and with a wealth of experience from similar investigations, they will trace and recover misappropriated assets from fraudulent activity and will also protect and realise business and personal assets.

Author: Roger Isaacs – 1 April 2014

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