Vulnerability Assessment – Cash Flow Shortages

SITUATION

FSS was hired by a company to perform a vulnerability assessment to determine if cash flow shortages were the result of financial mismanagement or asset misappropriation.

STRATEGY

FSS conducted a comprehensive review of the accounting function including processes and controls. Interviews were conducted of key accounting employees. Advanced data analytics were used to combine disparate accounting information into a single platform for analysis to identify fraud symptoms including patterns, trends, and unexpected relationships indicative of fraud, waste and abuse. Based on our findings, a forensic image of the office computer of a key suspect was collected and analyzed.

RESULTS
  • Two separate financial accounting systems had not been fully implemented and beginning balances never entered, resulting in the inability to produce relevant and reliable financial statements.
  • Bank deposits were maintained in a manual ledger and frequently not entered into the financial accounting system until months later.
  • Bank reconciliations were not performed timely – many were performed more than a year after the statement date.
  • Evidence of child pornography was identified on the forensic computer image – law enforcement was contacted immediately – the computer, forensic image and the imaging equipment was turned over to federal law enforcement agents.
  • The suspect was terminated and prosecuted for possession of illegal images.
  • Recommendations were made to correct weaknesses identified.