Appointment Type: Expert advisor
Service Area: Fraud
Industry: Transport and Automotive
Litigation Type: Other
Size of Case: Under £100,000
During an investment appraisal exercise, the senior management team of a national logistics company became aware that the management accounts of a subsidiary were incorrect, but were unsure if this was due to fraud or error.
A forensic investigation revealed that the accountant responsible for preparing the accounts was not suitably qualified or experienced to fulfil the role, and the HR and due diligence processes in place were inadequate. No evidence of checks for references, qualifications, or ‘Right to Work’ had been performed.
A review of the accounts revealed numerous fundamental issues:
- Basic accounting reconciliations were not being performed;
- Standard journals such as accruals and prepayments were incorrectly calculated and posted;
- VAT returns were not submitted; and
- There was no formal review process of the accounts.
In addition to weaknesses in systems and controls and the accounting errors, the investigation also highlighted operational and Health and Safety issues.