Forensic Accounting / Raising of Capital Financing


The company’s Chief Financial Officer embezzled money, leaving the distributor with limited cash reserves and an accounting system that was in complete disarray. The embezzlement also altered the company’s net worth, jeopardizing many of their credit lines.

BIG Actions:

BIG began by conducting a forensic accounting engagement to retrieve the stolen cash. Immediately, negotiations were started with their banks to secure seasonal overdraft and credit line extensions even in light of their blown bank covenants.

From there, BIG performed extensive work inside the company, recreating accurate accounting records and implementing accounting policies and workflow procedures to ensure this type of fraud could not reoccur.

One way to increase the availability of cash is to properly determine the balance between customer demand and inventory levels. To do this, BIG conducted a Segmentation Analysis, enabling the retailer to purchase only the necessary quantities of merchandise. In addition, to reduce the risk of obsolete inventory, BIG implemented a new inventory ordering process; and lastly, conducted a customer profitability analysis to determine which customers and product lines were the most profitable.

The Bottom Line:

BIG was a key player in saving this retail distributor from going out of business, turning them back into a profitable, well-run company with positive cash flow.

Check out our Forensic Accounting Services.