We were engaged by a Czech company trading watches to review their Polish business with regard to steadily stagnating profits, low online business and the potential for other operational risks. The focus was to understand whether these criticisms were material and were the results of inefficiency, mismanagement, or even fraud.
We identified not only irregularities in the accounting of inventories and loans, but also intentional manipulations of intercompany payables to cover up the true economic situation of the branch. The consequences of these amounted to millions of Czech crowns. Our follow-up recommendations included changes in the management culture of the branch, strict amendments in accounting policies, changing their auditing firm, and the implementation of more robust financial management systems.
