Agency resolves internal fraudulent activity and improves controls

Our client’s need

Senior management of a government agency discovered that its Chief Financial Officer (CFO) had declared bankruptcy.  The management team wanted to understand whether the CFO’s distressed financial position had resulted in improper stewardship of its funds. The law firm that was counseling the agency needed a firm that could discreetly perform inquiries and testing of the CFO’s financial transactions to explore for potentially fraudulent or imprudent transactions.

Baker Tilly solution

We compared transactions initiated by the CFO to the organization’s policies, the CFO’s personal financial liabilities, and to parties related to the CFO (e.g., family members).  We found that the CFO had hired a personal friend and provided the friend with an off-the-books loan. The CFO also had not monitored closely the basic internal controls for the agency, such as policy and procedure updates and timely bank reconciliations.

Results achieved

We provided an objective report of our observations and recommendations that allowed the agency to terminate the CFO, implement a plan to improve its internal controls, and investigate other potentially improper activities internally.