Forensic Accounting Investigations and Logistics Metrics (#37)

In this podcast, we discuss the nature of forensic accounting investigations, when they are needed, and who may be involved in investigations. In the second part of the podcast, we also discuss logistics metrics. Key points made in regard to forensic accounting investigations are:

  • The forensic accounting investigator is called in which a client suspects that fraud has occurred.

  • The investigator gathers documents, examines them, and reports findings to the client. This work involves looking for anomalies, checking on the existence of suppliers, investigating disbursement spend, reviewing contracts, and so forth.

  • The investigator follows the money in asset misappropriation cases. This includes the examination of records and emails.

  • Nonprofit entities tend to be quite trusting and have few employees, which places them at a higher risk of fraud.

  • The investigator may need to look into conflicts of interest (such as business dealings with friends and family), corruption, and bribery. This may involve reviewing the existence of any payments to government officials.

  • Insurers may pay for the fees of the investigator.

  • May end up talking to the SEC, FBI, and other regulators and law enforcement agencies.

  • Forensic investigation skills may not be present in every Big Four office; tends to be concentrated in offices located in larger population areas.

Key points relating to logistics metrics are:

  • Percentage of certified suppliers; focus is on production suppliers.

  • On-time inbound delivery percentage; there is a penalty for both early and late deliveries.

  • Raw materials inventory turnover

  • Cost of rush freight services; too high a number indicates excessively low raw materials inventory.

  • Picking accuracy; focus is on parts shortages.

  • Order fill rate; can depend on the number of line items in an order.

  • Percent of products damaged in transit; can help to calculate on a quarterly basis, to smooth out short-term anomalies.

Related Courses

Business Ratios Guidebook

Fraud Examination

Fraud Schemes