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forensic accounting case studies
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Employee theft: bookkeeper with vendor control
Client challenge: unexplained cash pressure despite stable revenue.
Investigation process: vendor master analytics, duplicate payment testing, and bank reconciliation exceptions identified a vendor with a near-duplicate name tied to the bookkeeper’s address history.
Findings: circular transfers from AP to a controlled account; missing invoice PDFs for a subset of payments.
Financial impact: quantified misappropriation tied to specific weeks and cleared checks.
Resolution posture: strengthened civil remedies discovery and insurance notice evaluation - outcomes depend on jurisdiction and coverage facts.
Insurance fraud: inflated interruption loss
Client challenge: carrier disputed claimed lost sales during interruption.
Investigation process: POS reconciliation to GL revenue, inventory roll-forward, and payroll continuity testing.
Findings: revenue dip overstated due to misclassified intercompany transfers; partial mitigation not reflected in claim worksheets.
Financial impact: revised loss schedule with transparent assumptions.
Resolution posture: mediation-ready exhibits; settlement ranges depend on policy terms.
Divorce hidden assets: business distributions vs personal lifestyle
Client challenge: reported income inconsistent with spending and asset acquisitions.
Investigation process: distribution tracing, related-party loan testing, and credit card source-of-funds mapping.
Findings: recurring upstream transfers from operating company to a holding entity with incomplete disclosures.
Financial impact: schedule of flows for equitable distribution arguments and potential dissipation tracing.
Resolution posture: targeted supplemental discovery; outcomes fact-specific.
Shareholder dispute: diverted opportunities and expenses
Client challenge: minority shareholder alleged diversion of contracts and inflated expenses.
Investigation process: margin benchmarking, related-party expense testing, and email-assisted transaction mapping.
Findings: unusual expense concentration through a single vendor with overlapping ownership interests.
Financial impact: damages interface with lost profits and valuation themes.
Resolution posture: expert report track or mediation depending on forum.
Ponzi-style schemes: inflows, outflows, and investor tracing
Client challenge: identify who received what and whether new investor funds funded prior redemptions.
Investigation process: bank waterfall tracing, investor ledger reconciliation, and counterparty concentration analysis.
Findings: classic inflow/outflow timing mismatch and incomplete investor reporting.
Financial impact: schedules suitable for restitution discussions or civil recovery planning - always coordinated with counsel’s legal theory.
Resolution posture: receivership or parallel civil tracks may apply.
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