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A Case Study: Forensic Accounting For A Retail Business

Forensic Corporate Accounting

Let’s look at real-world corporate accounting. A local Oklahoma retail business that mainly dealt with cash transactions, was in financial trouble. They had a significant amount of cash on hand, but their reserves had been dwindling for some time. What was even more alarming was that the business had been losing money for over a year, and no one had noticed.

The problem had been concealed by the excitement of big discount sales and large cash deposits. However, behind the scenes, the margins were thinning, and the overhead costs were too high. The business had weak inventory purchasing and control procedures, which negatively impacted their cost accounting accuracy. The purchasing decisions were often based on personal relationships, and the inventory controls didn’t translate into proper accounting entries. This company needed to hire us sooner for their corporate accounting .

None of these issues seemed acute enough to cause alarm until it was almost too late. Unfortunately, when the situation was finally identified, the business failed to act decisively. As a result, they lost any chance of self-funding a recovery, and the ownership was unwilling to invest any more capital.

This engagement serves as a case study of how poor operational and accounting practices can doom a business in a trendy sector with no barriers to entry and a “wild west” atmosphere.

You can be assured that our corporate accounting advice is direct and comes with specific steps to take. If you know your business financials need some attention, give us a call before it reaches the point of no return. Call us today: 405-213-7057

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