A Distributor Recovered $700k in Overbilled Charges

The Client

Southeast Wisconsin Distribution Company

Measurable Result

Assurance professionals assist distributor in indentifying over $700k in overbilled charges.

The Story

While evaluating period financial results, a distribution company had unanswered questions as to why their margins were deteriorating and costs had increased more than anticipated. Unable to identify a glaring issue with their books and records, the distributor contacted the assurance professionals at SVA to investigate.

An internal control analysis was conducted over both the purchasing and accounts payable function. Forensic-like procedures were performed on specific areas within their functions which SVA had identified as lacking key controls. SVA’s professionals closely evaluated invoicing procedures, reviewed pricing and looked for anomalies in the recording of costs off invoices tracking the costs back to original documentation in many cases.

As a result, recommendations were made via a comprehensive report to make structural changes in their routine purchased inventory process – including enhancing reconciliation procedures and eliminating variations in their purchase order/invoice matching procedures.

Additionally, SVA identified the core reason for the declining margins. An overseas supplier had taken advantage of a hole in the distributor’s control system and double-billed a significant amount of duty charges. The testing and report presented by SVA summarized a potential recoverable loss exceeding $700,000 which had been incurred in just the past year.