Forensic Accounting leads to improved business process

Netrika Consulting was retained by a company to carry out forensic accounting of fabrication work done at its premises. The vendor had raised a dispute regarding payment which had led to the request for forensic accounting.

As Netrika perused the documents, it was found that, after the allocation of contract, the scope of work for the vendor had been reworked five times. A change in the drawing was also carried out. All the running bills had been approved based on the completed work and the material that was at the site. However, no physical verification of the work was carried out before the running bills had been approved.

It was noticed that some work had not been carried out due to change in the drawing. However, according to the running bills the work had been completed as material was lying at the site. The unused material was then taken back by the vendor and the work was amended. The running bills had been based on material brought at the site. The final bill was higher than what had been expected by the company. When a physical verification was carried out, there were several instances of variation. When a physical verification of the work done was carried out, there was variation found in the quantity and quality of the materials used.

Some of the work at the premises had never happened. The payments were reversed and the supervisor who was responsible for the payment was identified for making the excess payment. The assignment also helped in identifying the gaps in control processes, which resulted in excess payment being made to the vendor. The best practices to be followed to avoid such an occurrence again was also suggested.