Forensic – Financial Investigations - Kreston

Forensic – Financial Investigations

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FINANCIAL INVESTIGATIONS
AND ANTI-FRAUD PROGRAMS

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KRESTON IN UKRAINE

Kreston GCG is a Ukrainian division of Kreston International — one of the world's largest accounting and consulting networks with a global resource of more than 25,000 dedicated professionals located in 125 countries.

SIZE OF FINANCIAL LOSSES

What is the actual size of losses and potential effect of damage from corrupt practices?
5%

FROM REVENUE GLOBALLY,
ACCORDING TO ACFE

5-15%

FROM REVENUE

In Ukraine,
according to
Kreston GCG

HOW DO THESE LOSSES OCCUR?

Bribery and corruption

  • Illegal gratuities
  • Economic extortion
  • Kickbacks
  • Bribery practices
  • Non-arm's length transactions

Misappropriation and embezzlement

  • Illegal use of assets
  • Unconcealed embezzlement
  • Fictitious transactions and price rigging
  • Unwarranted spendings
  • Procurement of illiquid assets
  • Unwarranted write-off

Financial statement fraud

  • Improper recognition of revenue
  • Concealed liabilities and revenue
  • Overstated value of assets
  • Improper disclosures
  • Timing differences
  • Understated liabilities and revenue
  • Falsified contracts and source documents

Information
theft

Sabotage

Negligence

FRAUD IN UKRAINIAN COMPANIES

звіт с.1-2
звіт с.3-4
звіт с.5-6

OUR SOLUTIONS

Kreston GCG offers forensic services that cover all areas exposed to fraudulent activities and resultant damages, abuse of office, neglect of duty, and other harmful actions affecting your business both from within and in your relations with counterparties.

Financial investigations

Retrospective audit of the company operations. Assessment of damages and lost profits, search for the guilty parties and collection of evidence.

  • Analysis of security services used. Evaluation of procedures and internal policies.
  • Performance audit and measurement of financial losses by reference to production, purchases, sales.
  • Fraud investigation in a group of companies.
  • Identification of cases of misappropriation and embezzlement, overstated expenses, understated revenue, corrupt practices, conflicts of interest.

Anti-fraud systems

Development of anti-fraud systems. Monitoring of operations, implementation of policies and internal controls.

  • Development of a fraud prevention plan.
  • Estabishment of a corporate hotline.
  • Preparation and implementation of an online form for inquiries.
  • Organization of processes in the internal control and economic security department.

Search and recovery of assets, support in disputes and litigations

Implications from corrupt practices can be decreased via pretrial proceedings and recovery of stolen assets in Ukraine and internationally through legal recourse. Even a selective punishment of responsible parties is a mandatory measure to control fraud in the future.

  • Measurement of damage, as well as the revenues and opportunities lost.
  • Collection of non-public information on the parties to dispute.
  • Dispute analysis and strategy development.
  • Adequate collection of evidence for law enforcement agencies and courts.
  • Forensic accounting expert examination.
  • Search of assets in various jurisdictions.
  • Legal support in Ukraine and abroad. Provision of an expert opinion evidence.

OUR CASES

Here you can see the effect of our financial investigations and assessments of how any economic security can be exposed to risks.

Стратегия

ALCOHOL BEVERAGE HOLDING

The analysis and financial investigation revealed:


  • ₴3.8 million of damage inflicted by the holding as a result of inefficient management of accounts receivable, unreasoned transfer of advance payments to non-credible suppliers;
  • ₴4.9 million of damage inflicted from inefficient management of stock;
  • – overstatement of costs of capital repairs and construction works for ₴1.4 million (costs of work and materials included), which reached 220% in some cases;
  • – unauthorized access to the warehouse in violation of security rules;
  • – risks of fraud due to insufficient automation of cash accounting, insufficient quality of document circulation;
  • – policy gaps stemming out of conflict of interest and segregation of duties, which created ample opportunities for fraudulent activities.
Read more
Стратегия

PUBLIC UTILITY ENTERPRISE

The financial investigation revealed corrupt practices that generated ₴250 million of losses for 3 years, including:


  • – overstated prices and volumes of repair and construction works;
  • – overstated cost of the services procured;
  • – understated value of the premises leased (up to 10-15 times);
  • – poor control over consumption of POL, water, electricity;
  • – mismanagement of liquidity and debt;
  • – unreasonable sale of equipment and scrap metal.
Read more
Стратегия

AGRICULTURAL GROUP

The financial investigation pertained to the use of loan funds over the last 3 years and revealed a number of fraudulent activities performed by executives that generated losses for the owners:


  • – siphoning off of cars, equipment, real estate to the benefit of related parties for more than ₴140 million;
  • – siphoning off of loan funds to the benefit of non-residents for more than $80 million;
  • – sale of products to related parties at depressed prices, thus, causing losses of more than ₴1 billion;
  • – transfer of profit participation rights of subsidiaries to the benefit of related parties for over ₴400 million;
  • – creation of 'technical liquidity' to obtain loans that exceeded the holding’s credit solvency;
  • – creation of excessive amounts of collateralized grain (with an international surveyor involved) that exceeded the actual capacity of elevators.
Read more
Стратегия

PHARMACEUTICAL ENTERPRISE

The inventory count and analysis of security system revealed:


  • – systemic violations in the accounting of the warehouse inventory, falsification of inventory count;
  • – poor-quality equipment in warehouses, which led to systematic errors in counting and weighing;
  • – manipulations with the inventory written-off for production, overstatement in the quantity of inventory items written off;
  • – inadequate management of the employee access system enabling valuable articles to be taken away by car;
  • – ineffective fire safety system that creates risks of damage to property and puts the lives of employees in danger of a fire accident;
  • – conflicts between production and financial staff, which decreased the overall performance.
Read more
Стратегия

AGRI-INDUSTRIAL GROUP

The financial investigation revealed that the management was siphoning assets off and inflicted ₴20 million of damage on investors such as:


  • – conclusion of fictitious service contracts;
  • – multiple sales of assets with the price increasing with each new stage;
  • – manipulations with the inventory written-off for production, overstatement in the quantity of inventory items written off;
  • – interest-free financial aid provided to related parties on a regular basis;
  • – fraudulent purchase and sales of companies;
  • – inventories were moved out and written off, allegedly, to support the company operations;
  • – leasing of unusable land plots.
Read more
Артем Ковбель

Artem Kovbel

Partner

Search and Recovery of Assets
Support in Disputes and Litigations
Financial Investigations

Артем Ковбель
Святослав Ефремов

Sviatoslav Yefremov

Partner

Financial Investigations
Anti-fraud Systems
Financial and Tax Due Diligence

WHY US

No project we conducted has ever ended without significant problems or violations detected.

7000+ PROJECTS COMPLETED

EXPERIENCE

Being a part of the leading global network Kreston International, we have access to the best auditing and consulting practices.


TEAM

Our team comprises 30 experts from Ukraine and more than 200 from North America and Western Europe.

EXPERTISE

We have expertise in fraud investigations, performance assessments, corporate intelligence, support in disputes, litigations, development of anti-fraud systems.

Audit and consulting practice by Kreston GCG

7000+

PROJECTS COMPLETED

200+

LOYAL CLIENTS

TOP12

OF THE WORLD RANKING

150+

IN-HOUSE STAFF
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