Tate and Tryon
With a focus on the non-profit industry, Tate & Tryon provides fraud prevention and consulting services that range from outsourced accounting to audit and assurance, including financial statement audits and consultative services. During what was thought to be a routine client engagement, Tate & Tryon performed extraction procedures on accounts payable data using IDEA® Data Analysis software. Testing included:
- A match between a vendor’s business address and an employee’s home address
- Totaling expense reimbursements by employee for the past year
A review of the data extraction results raised a concern as the Tate & Tryon team noticed what appeared to be an indicator of suspicious activity within the data. Of particular note was that one employee, Sam, had more than 25 expense reimbursements totaling approximately $18,000 for the past fiscal year—nearly three times more than any other employee. Interestingly, the same employee’s home address also matched a vendor’s business address.
To determine the validity of the data, the investigative team examined various financial documents, including accounting records, expense reports, check requests, cancelled checks, invoices and receipts.
To determine the types of asset misappropriations that may have occurred, key employees and vendors were interviewed, and the legitimacy of the financial records were examined. To conclude the investigation, a search of Sam’s desk area, computer drives and email activities made it clear that assets had been misappropriated in several ways:
- The client had been paying Sam’s personal rent, with Sam’s landlord being listed in the client’s vendor master file.
- Sam received more than 120 reimbursements by submitting fake invoices and receipts from other employees’ credit cards as support.
- The client had also paid for several repairs to Sam’s personal car.
Spear-headed based on an anomaly revealed by IDEA, the investigation led to the immediate termination of Sam. Emails confirmed that Sam had access to other employee’s receipts, which he then used to support his claims. Documents found at Sam’s desk had been altered, including with forged supervisor signatures.
In the end, Tate & Tryon demonstrated that over a six-year period, Sam had embezzled more than $150,000 USD from the client. In light of the evidence against him, Sam plead guilty to a federal charge of interstate transportation of stolen property.
Using data analytics to perform routine checks into the general ledger can uncover suspicious trends, patterns, or outliers that can be missed when poring over data manually. With the help of IDEA,Tate & Tryon uncovered—and ultimately stopped—a significant fraud scheme.