Industry: Consumer Products
Region: Ecuador | LATAM
Situation
A multinational company identified irregularities within its Ecuador operations after discrepancies were discovered between customer payments and accounts receivable records. Initial concerns suggested that an employee was misappropriating customer funds while manipulating invoice and accounts receivable information to conceal the fraud. Sierra Forensic Group was engaged to investigate the allegations, quantify the potential losses, and support potential legal action.
SFG’s Role
Sierra Forensic Group led the forensic accounting investigation, working closely with executive leadership and legal counsel to analyze financial records, reconstruct the employee’s activities, and determine the nature and extent of the suspected fraud.
Our Approach
- Analyzed customer payment histories, accounts receivable records, invoices, and supporting accounting documentation.
- Reviewed invoice modifications, payment applications, and accounts receivable aging reports to identify manipulated transaction dates and invoice kiting activities.
- Reconciled customer payments to accounting records to identify misappropriated funds and quantify financial losses.
- Conducted strategic interviews with customers and employees to validate transactions, corroborate investigative findings, and better understand operational processes.
- Evaluated internal control deficiencies and recommended enhancements to strengthen cash receipt and accounts receivable controls.
Outcome
SFG’s investigation identified substantial evidence supporting the client’s concerns regarding the misappropriation of customer funds and the manipulation of accounts receivable records. Based on the investigative findings, the client terminated the employee, initiated appropriate legal action, and implemented enhanced accounts receivable, cash receipt, and revenue cycle controls to reduce future fraud risk.
Services Provided
- Accounts Receivable Fraud Investigations
- Forensic Accounting
- Investigative Interviews
- Financial Investigations
- Internal Control Assessments
- Fraud Risk Assessments
- Litigation Support