A gaming company identified a multi-million dollar variance in the cash and debtor balances recorded in its accounting and electronic betting systems despite a month end process of reconciliation.

Ferrier Hodgson Forensics was engaged by the client to determine the cause of the variance.

In order to determine the cause of the variance, Ferrier Hodgson Forensics:

• Engaged our Forensic IT experts to virtualise the systems so testing could be done external to live 24 hour operating systems.
• Reviewed the electronic betting and accounting systems for the method of accounting for each type of electronic betting transaction to identify areas that may have resulted in the variance;
• Reconstructed transactions and accounting entries to test the month end reconciliation process;
• Documented sources of information for the accounting process and what each step in the process was seeking to achieve; and

As a result of our review we identified that the cause of the variance related to a poorly understood and designed reconciliation process and poor controls relating to authorisations on client accounts.

As a result of our engagement, Ferrier Hodgson Forensics:

• Identified weaknesses in controls for management action;
• Documented the process of accounting for electronic betting, identified the reason for each step of the process, devising a streamlined and robust accounting process; and
• Provided clarity to the client’s Board on the reasons for the variance.