Business Fraud

Graham Ball :: Friday 29th March 2019 :: Latest Blog Posts

I was asked by the owner of a small chain of pubs to investigate why his income had fallen in the previous 6 months. The businesses had a turnover of about £3m.

There were three pubs, two shared staff and the third had dedicated staff.

We started by reviewing sales and margins on each of the pubs on a monthly basis. This showed a pattern of fluctuating turnover and margins that was fairly inconclusive, but also a significant fall in fruit machine income. However when the margins were compared with what was anticipated I quickly identified quite clearly that there was an issue with margins on bottled beers and lagers.

We then discussed with the owner, what he understood to be the processes for cashing up, cash handling and emptying the fruit machines.

We then studied the pattern of shift work and identified when cashing up occurred and what staff were responsible. There appeared to be no clear pattern.

We then moved to interviewing staff. We interviewed all staff, making it clear to them that we were just trying to understand the procedures and ensure that they were consistent. We were not trying to catch anybody out.

By talking with the staff, it became very clear that the procedures that the owner thought were in place, were not being applied. There were issues with "cashing up", emptying fruit machines and most of all, with stock being passed out the back door.

Having identified certain issues with the staff, we were quickly able to identify who was responsible and how it had been done.  We were able to quantify the fraud at about £200,000 and to advise on improvements to systems and processes to make them more robust.