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We are a certified public accounting firm that specializes in forensic accounting. We do not offer compilation, audit or tax preparation services. Instead, our firm reviews income and asset losses related to disasters or fraud. Due to the nature of the services we offer, our work environment is dynamic, challenging and encourages innovative thinking. The unique nature of our work allows employees to sharpen analytical skills while employing professional skepticism and offering the latitude to exercise creativity.

Success as a forensic accountant requires a unique blend of the following skills: 

  • Analytical ability
  • Inquisitive mind
  • Creative thinking
  • Technical accounting

To see these skills in action, click the topics below. If you have the skills we are looking for, submit your resume to hr@assurancefa.com.

Eyes for the Details

A retailer of high-end eye wear experienced flood damage. The store was closed for a few weeks and subsequently moved to a new building located approximately 4 miles away. The company claimed the move confused customers and asserted a claim for business income loss exceeding $1 million. The claim was largely based on a sales growth comparison between the subject store and the company’s other stores located within a 10 mile radius.

We determined that the claimed sales growth was not related to an increase in demand. Instead, the apparent sales increase was due to a consolidation of stores. Several neighboring locations were closed and customers from those locations migrated to the next closest store. Therefore, we determined that claimed sales growth at the subject location was not appropriate. In fact, we determined that sales were expected to decline due to an increase in the number of vision correction surgeries performed in the area. We calculated a combined business income and extra expense loss of around $150,000, which became the basis for the settlement of the matter.

Formula for Success

A manufacturing company was closed for several months as a result of a fire. The company submitted a business income loss claim of over $500,000.

We were hired by the company’s insurance carrier to evaluate the accuracy of the claim. We reviewed the company’s manufacturing cost records and found a mathematical error in the claim and the accounting system pertaining to an allocation of overhead costs and a complex raw material conversion formula. The error caused a nearly 15% understatement of the claim. The accurate settlement of the claim is only part of the story. In addition, the company used our findings to revamp their cost accounting procedures.

All Things Considered

A paint supply company suffered a fire at its main distribution warehouse and claimed an inventory loss of over $800,000. The majority of the damaged inventory was burnt out-of-sight, so the claim could not be corroborated by examining the damaged inventory.

To verify the reasonableness of the claimed loss, we reviewed historical inventory count sheets, purchase invoices, sales reports. Based on analysis of such records, we determined that the claimed inventory quantities appeared reasonable. However, we noted that a portion of the claimed inventory was greater than 3 years old and was considered obsolete. The obsolete items were excluded from the settlement of the claim.

Wrong Basket of Eggs

A cake manufacturer received a batch of contaminated eggs from its supplier. The eggs were used in production before the contamination was discovered. As a result, the manufacturer discarded several days of production. The manufacturer claimed a loss of inventory and additional expenses associated with identifying and segregating the contaminated production.

We reviewed production, inventory and sales documents and determined that some of the cakes that were destroyed were already expired. Also, we noted that some of the expenses that were claimed would have been incurred regardless of the product contamination. Based on our findings, we excluded some of the claimed inventory and expenses from our calculation and the matter was settled at the amount we calculated.

On Solid Ground

A franchised service company was destroyed by an intentionally set fire. We were asked to evaluate the financial condition of the business and it’s owner to determine if the owner had the financial motive to set the fire.

We studied tax returns, loan agreement and banking records among other documents. We found that the company was compliant with all debt agreements, was experiencing sales growth and increased profitability. We also noted that the company had been paying down debt due to strong cash flow. In summary, the financial position of the company and its owner was strong so there was no financial motive for arson. Based on our analysis, the insurance company ruled out the business owner as a suspect in the arson.

Unearthing the Facts

A crop grower alleged that actions of a pesticide company resulted in a major decrement in crop production. The crop grower sued for lost profits of around $500,000.

Our team was engaged to review the calculations made by the plaintiff’s economist. We noted inconsistencies between the production records and the former field manager’s testimony, gaps in the sequence of sales invoices, a number of large unexplained cash receipts, and a large amount of proceeds from federal crop insurance. A member of our team was deposed in the matter. Subsequently, the plaintiff withdrew its suit and was indicted for insurance fraud.

Unravelling a Scheme

A parts distributor claimed that its warehouse manager stole a significant amount of inventory over the course of several years. An employee dishonesty claim was filed with the company’s insurer. We were called in to investigate the claim.

We found that the majority of the claim was based solely on a variance between the general ledger inventory balance and the inventory balance evidenced by the warehouse inventory system. Our analysis revealed that a similar discrepancy continued to occur even after the warehouse manager was terminated. Therefore, we determined that the apparent discrepancy was due to accounting error and not theft. Upon receipt of our report, the insurer rightfully denied the claim.

Down in Flames

A fire occurred at the former home of evangelical celebrity. Investigators determined that the fire was intentionally set. The damage resulted in a multi-million dollar insurance claim by the homeowner.

We were requested to perform an analysis of the homeowner’s financial situation and determine if the homeowner had financial motive for arson. Through our analysis, we determined that the homeowner was chronically behind on mortgage and utility payments, and that the homeowner’s credit card balances had risen substantially. We determined the homeowner’s income was insufficient to meet monthly obligations. The insurance company used our findings to help prove the homeowner’s culpability in the arson.

"Meating" of the Minds

A contractor accidentally unplugged a freezer wire in the warehouse of a food distribution company. The following morning, the distribution company found that a large quantity of meat had spoiled. Prior to that discovery, some of the meat was sold to local restaurants and there were reports of patrons getting sick from the food. The food service company claimed that the contractor caused not only a loss of inventory, but caused the company to lose several customers. The company claimed a loss of several hundred thousand dollars.

We were hired to review the claim. We found adequate support to justify the company’s claimed inventory loss. However, the claim for lost customers was contradicted by the records. We found that some of the claimed customers had stopped doing business with the company before the spoilage incident. In addition, we found that other customers had shown decreasing sales volume for months. Instead of lost customers, we calculated lost sales for approximately 2 days. The claim was settled based on our findings.

When Experience Counts

A retailer was only in business for four days when a fire destroyed the building and its contents. The business would be closed for seven months to rebuild. Without an established track record, how could the business income loss be determined? How long would it have taken to ramp-up? What level of sales would have been earned over the seven months? Would the cost structure change in the first few months of operating?

We have studied the operating results of literally thousands of companies. Therefore, we knew where to look to find the answers. We reviewed the insured’s pre-opening advertising expenses, local economic and demographic conditions, the insured’s inventory levels and the inventory turnovers for similar type businesses. In addition, we interviewed owners from other similar businesses to understand the ramp-up cycle in the industry. We prepared a seven month projected income statement, which was used as the basis for the business income loss calculation.

Helping Make Sure

An insured retail business submitted a substantial employee dishonesty loss claim. The employee in question was taking the money for cash sales, keeping the money and never ringing up the sale. On the surface, the claim appeared to be properly documented. The insurance adjuster called us in to make sure.

We reviewed sales, purchase and inventory records and created a database to match purchase and sales transactions. Unmatched transactions were compared to the inventory records and a discrepancy was noted. The discrepancy was due to the inventory that left the premises, but was not accounted for in the sales records (i.e. not rung up). We found that a lot of the transactions included in the claim were due to accounting errors, not to theft. The adjuster and the insured agreed with our findings.

Piecing it Together

The manager of a light-scale manufacturing company was going through deposits records one day and noticed that there were very few cash deposits. The company began to suspect that its former bookkeeper had misappropriated funds. But how? The bank statements reconciled. All sales proceeds in the general ledger were accounted for. The outside CPA did not notice anything unusual.

The company’s insurance company hired us to evaluate the potential loss. We reviewed sales invoices and banking records and downloaded archived/deleted data from the accounting system. We put all of the pieces together and determined that the bookkeeper misappropriated approximately $300,000 over three years by stealing cash sales proceeds and then modifying sales records. Our report was used for the insurer to document the covered loss and also used as the basis for criminal prosecution.

No Smoke

A manufacturing firm unintentionally used a faulty chemical while producing labels for a fortune 500 cigarette company. The labels were applied to cigarette packages and the chemicals permeated the package and ruined the tobacco. The cigarette company eventually destroyed the cigarettes with a retail value of over $1 million and requested the label manufacturer to reimburse the full retail value.

We were requested to review the reasonableness of the claimed loss. We analyzed the cigarette company’s production records, internal cost reports as well as publicly available financial statements. We determined that the cigarette company did not lose sales and had the capacity to reproduce the inventory. Therefore, the true economic loss of the cigarette maker was limited to the variable raw material and labor costs required to reproduce the cigarettes. Our analysis did reveal some increased operating expenses that were not included in the claim. The matter was settled with our calculations.

Looking Behind the Numbers

A restaurant suffered a total loss, as a result of a fire. The company was seeking $640,000 in lost profits from the responsible party.

The CPA hired by the plaintiff predicated his calculations on the assumed continuation of a 13% prior year growth rate. By looking behind the numbers, our professionals determined that the prior year “growth” was merely the result of changing to a 7-day operating week. Furthermore, we noted that prior to the fire, the restaurant reverted back to a 6-day week. So not only would sales not have grown during the suspension period, they would have declined. Accounting for the operational changes drastically reduced lost sales. The plaintiff was awarded the amount calculated by us of around $340,000.

Assembling the Case

A furniture store was closed for four months due to water damage. The CPA hired by the company calculated a loss exceeding $1 million. In addition to a detailed review and analysis of the company’s books and records, we interviewed personnel from other local furniture retailers, talked with the company’s suppliers, researched secretary of state filings, and obtained historical newspaper articles that were pertinent to the matter.

We discovered that prior to the damage, the subject company lost key sales people to a newly formed regional competitor, and the company had recently lost key suppliers. In addition, we learned that a number of stores similar to the subject company had recently gone out of business due to increased competition and stagnant demand. By putting it all together, we calculated a loss of $250,000. The company’s CPA, who calculated the million dollar loss, subsequently withdrew from the engagement and our client achieved a favorable settlement.

When Time is of the Essence

One of the world’s largest snack foods makers suffered a severe inventory loss. The company’s insurer quickly deployed a member of our team. The company was on the verge of issuing its quarterly earnings to Wall Street and wanted the issue resolved swiftly.

We responded immediately to the assignment and were in constant communication with the company’s accounting department. We analyzed the records, determined the amount of the insured loss and issued our report within 7 business days. The company met the deadline and had high praise for the insurer and our team member.