Case Study C: Uncovering and Resolving Internal Fraud in a City Centre Pub

Overview

• Type of Business: City Centre Pub

• Staff: Two bar managers handling stocktakes internally

• Turnover: €160,000-€180,000 per month

Identifying Stock Shortages with Independent Stocktakes

• Stock Watch began stocktaking for the pub in early November

• On 1st December, a full stocktake revealed a serious shortage of €2,300

• On 1st January, another stocktake showed no improvement, but the accounts department used Stock Watch's closing stock figure for their end-of-year accounts

Investigating Significant Variances in Stock Figures

• The variance between the in-house stock count and Stock Watch's stocktake revealed a €39,000 deficit for the year

• Stock Watch was asked to verify their figures and provide an opinion on the situation

Uncovering Internal Fraud

• Investigation revealed that the two bar managers and an accounts department employee were working together to manipulate stock figures

• This fraudulent activity had been ongoing for years, resulting in significant losses for the pub

Resolving the Situation and Ensuring Long-Term Success

• Over the next three months, the involved bar managers and accounts employee left the company for various reasons

• Stock Watch has continued to work with the owner for the last 6-8 years, ensuring accurate stocktakes and minimal deficits

• Even during busy months, the pub's stock deficit has not exceeded 1.00%, demonstrating the value of independent stocktaking services

Stock Watch played a crucial role in uncovering and resolving internal fraud in this city centre pub. By providing independent stocktaking services, we identified significant stock shortages and inconsistencies in the business's records. This ultimately led to the departure of the employees involved in the fraudulent activity and improved the pub's stock management and profitability. This case study highlights the importance of independent stocktaking services in safeguarding businesses from internal fraud and ensuring long-term success.