Internal and Board of Directors driven investigations have become commonplace in public, closely held and governmental organizations. These types of investigations can be driven by a wide variety of events from whistleblower complaints and regulatory actions to issues identified by the organization’s auditors. Irrespective of what or who gave rise to the issue, it is critical that the issue be addressed and investigated fully and impartially. While an internal investigation is typically led by outside legal counsel, it is often necessary to bring outside accounting expertise to the investigative team.
We have been a part of those teams in a wide range of internal and Board of Directors driven investigations. We work collaboratively with outside counsel to bring our wealth of accounting, internal control and operational knowledge to the team. We understand how an organization’s accounting controls should be operating, what and where documentation and electronic data should be located and how to de-cipher complex accounting and financial reporting data.
Investigation – Alleged Ponzi Scheme
- We were retained by outside counsel of a publicly traded corporation to assist in its investigation of long-standing allegations that the company was involved in a Ponzi scheme.
- Our work included interviewing senior corporate officers, key accounting department employees, analysis of bank reconciliations and the related transactional data as well as bank statements over a 3-year period.
- Working collaboratively with outside counsel, we studied the sources, uses and fund flows of the organization and authored a report indicating that none of the elements of a Ponzi scheme were present.
- Our work concluded, and no future allegations of a Ponzi scheme were made.
Investigation – Corporate Controller
- The Big Four auditor of our client, a global corporation, received information that one of the organization’s divisional controllers had committed fraud at his former employer and was terminated but not prosecuted.
- The auditor would not sign the audit opinion until the company independently investigated the transactions that were recorded and/or approved by the controller during his 1-year tenure at the company.
- Our work involved interviewing a number of the controller’s colleagues including everyone who reported to him directly. In addition, we performed an analysis of all transactions initiated or approved by the controller as well as all vendors that were added to the company’s accounts payable system during his tenure.
- Ultimately, we determined that no suspicious transactions were observed during the controller’s tenure, however the controller was terminated.
The auditor reviewed our work and ultimately issued an unqualified audit opinion.
Investigation – CEO
- Our client, the independent counsel for a Fortune 500 company received a whistleblower complaint alleging that the CEO was using the company jet and other corporate assets to conduct an extra-marital affair.
- We were retained to assist the independent counsel by reviewing the CEO’s expense reports as well as the flight logs and refueling charges for the corporate jet and comparing those records to the CEO’s calendar that had been maintained by his secretary.
- Those records were then compared to the private calendar that was found on his company supplied cell phone.
- Shortly after the independent investigation was completed, the CEO elected to retire from the company.