These are illustrative examples only — invented to show the shape and depth of a real investigation, not an actual candidate's work or a real business's records.

Channel Stuffing at a Software Reseller

Category: Financial Statement Fraud — Revenue Recognition

Profile: A mid-size software reseller consistently books 35–40% of each quarter's revenue in the final three business days, with sales concentrated among a small group of distributors who have historically returned a meaningful share of end-of-quarter shipments within the following quarter.

Red flags:

• Revenue heavily back-loaded into the last few days of every quarter
• A small group of distributors accounting for a disproportionate share of quarter-end shipments
• Return/credit memo volume spiking in the first weeks of the following quarter
• Sales terms for quarter-end shipments quietly more generous (extended payment terms, informal return understandings) than the company's stated policy

Investigation: The investigation traces quarter-end shipments to actual delivery confirmation (not just invoice date), compares distributor-level sell-through data against booked revenue, and reviews sales correspondence for any side agreements not reflected in the formal contract terms.

Finding: Illustrative finding: a pattern consistent with channel stuffing — revenue recognized on shipments the distributors were never expected to sell through at the stated volume, with an informal understanding that unsold units would be returned. Recommendation: restate the affected quarters and implement independent sell-through verification before revenue recognition on distributor sales.

A Ghost Employee on a Manufacturing Payroll

Category: Frauds Against the Business — Payroll Fraud

Profile: A payroll audit at a mid-size manufacturer flags an hourly employee record with no benefits enrollment, no tax withholding changes since hire, and a direct-deposit account number matching a current payroll supervisor's own account on file from years earlier.

Red flags:

• No benefits enrollment or tax election activity on an active payroll record
• A direct-deposit account shared with another employee's historical record
• Timecards for this employee approved exclusively by one supervisor, with no independent verification of hours worked
• No physical presence of this employee reported by any co-worker interviewed as part of routine HR check-ins

Investigation: The investigation confirms the account-number match against payroll history, checks building access-badge logs for any activity under this employee's credentials, and interviews the approving supervisor and co-workers on the same shift.

Finding: Illustrative finding: a ghost-employee scheme — the "employee" does not exist, and wages were diverted to the approving supervisor's own account over several years. Recommendation: implement segregation of duties between timecard approval and payroll processing, and require periodic independent verification of active employee rosters against physical presence.

A Staged Property Insurance Claim

Category: Financial Sector Frauds — Insurance Fraud

Profile: A small business owner files a substantial property-damage claim for inventory loss six weeks after significantly increasing coverage limits, with supporting inventory records that do not reconcile to the business's own prior-year tax filings or point-of-sale data.

Red flags:

• A large claim filed shortly after a coverage-limit increase
• Claimed inventory value inconsistent with the business's own historical financial filings
• Supporting purchase receipts from a supplier with no independently verifiable trading history
• The claimant's account of the loss event containing timeline details inconsistent with independently obtainable evidence (e.g. security footage, delivery records)

Investigation: The investigation reconciles the claimed inventory value against tax filings, point-of-sale records, and supplier confirmations, and independently verifies the loss-event timeline against any available third-party evidence.

Finding: Illustrative finding: a pattern consistent with a staged or inflated claim — claimed inventory materially exceeds what the business's own financial records support, filed shortly after the policy was adjusted to cover a larger loss. Recommendation: refer for further review before settlement and flag the claimant history for future underwriting review.