Forensic Accountants Quantify Lost Profits When a Peril Impacts Retailers

Experts who understand the retail industry

The landscape of the retail market is extremely dynamic, so if you don’t closely monitor changes, you’ll soon fall behind your better-informed competition. At North American Forensic Accounting PC, we are committed to providing the best quality services to our retail clients. With this in mind, we continuously observe trends in the retail industry to track the impacts of Inflation, consumer confidence, disposable income levels, even the rate of unemployment across the industry and on the individual business level. Armed with this information, the experts at NAFA can truly analyze your unique situation and provide a solution to match.

Essential services for insurance carriers, adjusters, and attorneys serving retail clients

Because their business is so public facing, with millions of in-person interactions a day, retail companies rely heavily on insurance providers and legal representatives. This is in addition to the routine issues that arise in the course of any business. The many issues that might result in an insurance claim or legal dispute include:

  • Breach of contract
  • Business interruption
  • Consumer complaint
  • Inventory shrinkage
  • Mergers and acquisitions
  • Personal injury from slip-and-fall or falling merchandise accidents
  • Property damage
  • Shareholder or partner disputes
  • Theft
  • Vendor disputes
  • Wage and hour disputes

Many of these cases require in-depth investigation and calculation of losses. The forensic accounting experts at NAFA work closely with insurers, adjusters, and law firms to support litigation. We prepare damage assessments and stand by our work, offering cogent testimony as expert witnesses.

Proven leaders help you recover from business interruption

There are myriad ways a retailer can have business interrupted: fire, flood, cyber-attack, civil unrest, adjacent construction, work stoppages, a competitor’s unfair business practices, and a supplier’s breach of contract. Recovery can be costly and painfully slow, especially if you have trouble calculating your losses for your business interruption claim. The last thing you want is to submit a claim and have it rejected or downgraded because you lack the supporting evidence the insurer needs to approve your claim. At NAFA, we have extensive experience calculating business losses using clear, approved methods. We closely examine your business records to compile a detailed report of your insurable losses, not just for your down-time, but for the time your business needs to fully recover. Our team can also appear as expert witnesses, testifying to our methods of calculation in support of your litigation.

Reliable personal injury damage calculations

If a customer sustains an injury because of a hidden hazard at a retail establishment, the business can be liable for extensive damages. NAFA provides litigation support by calculating financial losses, which can include:

  • Present and future medical bills
  • Costs of physical rehabilitation
  • Present and future lost wages
  • Expenses related to a permanent disability

Economic damages calculations are vital, not just in themselves, but because most insurers use a multiplier of economic losses to put a price on the plaintiff’s pain and suffering. Yet, the calculation of future losses is as intricate as it is important. Figures cannot be speculative; adjustments made for inflation of wages and medical expenses must have a firm statistical basis. When you are embroiled in a serious injury case, you can trust NAFA to deliver reliable calculations in terms that are readily understandable.

Appropriate valuations of inventory losses

Retailers often suffer inventory losses which are insurable. The problem is, neither the business nor the insurance company can be sure about the value of the lost stock. For such cases, NAFA can perform a deep dive into business records to reconstruct the inventory prior to the loss. We present reliable calculations to speed the resolution of insurance claims, saving all parties time, money, and frustration.

Helping retailers recover from fraud

Retail “shrink” is on the rise, according to the National Retail Federation. In 2021, NRF reported that losses from theft, fraud, breakage, and other sources totaled $94.5 billion, up from $90.8 billion in 2020. Retail security executives blame upticks in shoplifting, organized retail crime and employee theft. If you own or operate a retail establishment or chain of stores, you know that shrink is at an all-time high, and that can be detrimental to your bottom line. While store security experts can protect you from shoplifters and smash-and-grab mobs, North American Forensic Accounting PC can help you investigate internal fraud that can undermine your business.

Types of fraud impacting the retail industry

The retail industry is a target rich environment for fraudsters. Common fraud schemes in retail include:

  • Register fraud — Your cashiers are your last line of defense, but too many are party to fraud. In collusion with shoppers who are known to them, they pull what is called “sweet hearting,” under scanning items their friends are purchasing. They might also offer inappropriate discounts.
  • Inventory theft — If your inventory dwindles inexplicably, it’s probably either shoplifting or an employee taking goods home.
  • Purchasing fraud — Are you getting every item you pay for? If vendors believe they can short you and get away with it, the practice will become commonplace. You might also have buyers submitting invoices for fictitious vendors.
  • Employee discount abuse — Discounts on store items are a nice benefit for your workers, but these should be limited to personal items, not shopping for their whole neighborhood.

With the growth in e-commerce and other pickup options new schemes are being thought of all the time, so the importance of vigilance within a retail organization only grows more important as the industry continues to evolve.

North American Forensic Accounting PC performs in-depth assessments for retail establishments

North American Forensic Accounting PC provides advanced accounting services to help retail establishments, their insurers, and their attorneys navigate a wide range of issues. NAFA serves clients from offices throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area. Call us at 347-286-4860 or contact one of our offices online to schedule an appointment.