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Case Studies
Case Studies
Your success is our success. We’re ready to quickly gain an understanding of what’s needed in each situation so that we can effectively deliver and support your objectives
Your success is our success. We’re ready to quickly gain an understanding of what’s needed in each situation so that we can effectively deliver and support your objectives
CFO in a Bind
A rapidly growing biotech company on the western side of Route 128 was getting a lot of attention from investors and eventually secured $55 million in funding. The only problem was that the Venture Capital investors required them to immediately switch from their small firm to a Big-4 auditor and audited financial statements were needed asap.
Their small CPA firm had taken care of all their accounting for several years, but the Big-4 auditor, because of how they apply the auditor independence rules, would not take on the company’s accounting. Suddenly the CFO was required to prepare and complete all the supporting analysis related to some fairly complex accounting, including the technical memos, to prepare for the audit. The auditors wanted to understand the technical accounting guidance to support the accounting treatment for certain equity instruments. Were they derivatives? Were the warrants debt or equity?
Where was the analysis of the stock options? Supporting analysis was needed. Looking at the complex equity instruments that were connected to the round of financing, and with a deadline fast approaching, the CFO decided that additional technical accounting resources were needed. A team member from Stone was able to go in, review all the documents, resolve the accounting issues and provide the technical accounting memos and related analysis to support the accounting treatment and satisfy the Big-4 auditor.
Forensic Accounting Skills at Work
A small non-profit south of Boston had been serving the local underprivileged community for many years when they noticed that cash was suddenly tight over the past several months. Receipts from grants were consistent with past years yet something was different.
Two people within the accounting staff had suspicions about the new payroll manager and called on one of our team members to take a look. A review of the payroll reports and some basic clerical checking revealed that something was amiss. Unauthorized payments were being made through payroll. After the payroll manager was let go, we identified all unauthorized payments made by the payroll manager, explained how the funds were being misappropriated and quantified the losses.
Fortunately, much of the loss was recovered as a result of our report. We stayed on to help the organization revamp and strengthen its internal controls to help prevent and detect this type of activity. Today the organization is thriving as it continues to serve the local community.
