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Forensic Accounting Case Study
You can't bank on a brother's love
Two brothers were partners in a funeral services business. After their bank merged with another institution, the funeral home received new deposit slips with new account numbers. Brother B opened the package only to discover a second account registered in brother As name. Brother A was diverting cash and check receipts to his own company, and marking the manual-filing system records as paid or as good faith credit.
But how much was Brother A skimming? Brother B engaged us to find out the extent of his losses.
We examined the manual record system to identify erasures and changes, but that wasn't enough. The team reconstructed the records in a custom-built database to immediately account for the years under investigation. The initial loss was calculated to be more than $1.5 million over seven years.
An interim report on the state of the internal controls and the extent of the losses was issued to the legal counsel and was incorporated in the arbitration proceedings. The team assisted the legal counsel by producing evidence and participating in a prolonged settlement negotiation. Ultimately, the case was settled. Brother A forfeited his share in the partnership and agreed to pay $1 million and legal fees.
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