Identifying Malfeasance in a Retail Business

CLIENT: A small chain of retail stores in New York City

Challenge

The client suspected internal theft or fraud after noticing discrepancies in inventory counts and financial records. They hired Bespoke Business Advisory to investigate and resolve the issue.

Solution

We conducted a forensic audit by reconciling transactions between their system and physical inventory. During this process, we uncovered that a manager had manipulated the accounting system to cover up unauthorized withdrawals and fictitious returns. We worked closely with the legal team to build a case, and we introduced new internal controls, including segregation of duties and more frequent financial reviews to prevent future malfeasance.

Outcome

The manager was dismissed, and the business recouped $80,000 in lost funds through insurance claims and legal action. Our enhanced controls helped the business regain trust among employees and clients, and theft-related losses decreased by 90%.

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