Fidelity Cases

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.

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.

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.