We were engaged by a Czech company trading luxury goods to review their foreign branch with regard to continuously stagnating profits, low online business, and potential for other operational risks. The focus was to understand whether these assumptions can materialize and are the results of inefficiency, mismanagement, or fraud.
We identified 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 resulting effects involved millions of Czech crowns. Our recommendations included changes in the management culture of the branch, strict amendments in the accounting policies, changing the accounting firm, and implementing more robust financial management systems.
