Treasury Department Inconsistencies


Who: An American marketing services company with a subsidiary in North China.

Background: The company suspected fraudulent activity in their treasury department and inappropriate approval for overtime in their human resources department.

Objective: The company asked ;Dezan Shira & Associates to conduct an internal control and compliance review on its North China subsidiary. The major internal control cycle review included looking at the following items:

  • Treasury
  • Purchases and accounts payable
  • Fixed assets
  • Inventory
  • HR and payroll

Dezan Shira & Associates Approach

Dezan Shira & Associates´ expert team worked closely with the company and performed the following tasks:

  • Reviewed major internal control cycles with the subsidiaries local management
  • Defined a risk control matrix for each of the major internal control cycles to identify discrepancies
  • Conducted implementation testing of all key controls
  • Identified internal control deficiencies
  • Identified fraud factors and fraudulent indicators
  • Recommendations on the control weakness and fraud risks


Dezan Shira & Associates´ review discovered the company's HR department manager had been approving unnecessary overtime pay for workers, and HR employees were creating their own labor contracts. We also discovered that the payroll manager in charge of treasury was conducting fraudulent activities. Several other inconsistencies were discovered and fixed leading to the overall lower operating expenses for the company. The company substantially altered its policies to be in compliance with labor laws, ultimately leading to a stable HR and Treasury department.