Case Study
Resolving a $20M inventory discrepancy and rebuilding a finance function from the ground up
A mid-market distribution company. Five years of compounding ERP errors. A Controller on medical leave. Financial statements management couldn't trust. Here's how it was fixed.
$20M
5 yrs
$20M
Inventory discrepancy identified and resolved
$4M
5 yrs
$20M
Incorrectly added to net income over 4 years
5 yrs
5 yrs
5 yrs
Of ERP errors brought to resolution
Background
Following a series of acquisitions, this company had grown rapidly; but its finance function had not kept pace. The ERP system, implemented five years prior, had never been fully configured for inventory accounting. Financials were produced on Excel. The Controller was managing cash flow, AP, and a sprawling inherited AR team across multiple locations, without a single financial analyst for support. Under the compounding weight, the Controller went on medical leave.
The Challenges
Inventory clearing account mismanagement
The full clearing balance was swept to COGS monthly as a reversing entry — incorrectly inflating net income by $4M over four years.
AP three-way match failure
PO pricing hadn't been updated for Covid-era freight surcharges. The AP team couldn't match invoices, POs, or goods receipts.
Fragmented AR across locations
Post-acquisition AR teams were never consolidated. Critical account knowledge was siloed in individuals at each location.
Treasury and fraud exposure
Manual cheques physically delivered to Canada Post by the same person who prepared them. Thousands stolen. Vendor impersonation emails reaching AP.
Manual depreciation on Excel
The ERP's fixed asset module had never been activated due to acquisition complexity. Every calculation done by hand.
No FP&A function
No financial analysts, no structured planning process, no visibility into cost drivers. Budgeting done ad hoc by the CFO alone.
What was done
Diagnosed and corrected the inventory clearing account — recognizing a $4M income overstatement as an additional loss on top of the $8M already on record.
Updated PO pricing to reflect freight surcharges, enabling accurate three-way matching and proper COGS recognition.
Managed a deliberate, relationship-preserving transition of AR accounts from location teams to head office — extracting and documenting siloed account knowledge.
Activated the ERP's fixed asset module, eliminating manual Excel depreciation and automating new additions through the AP entry process.
Restructured the finance department — bringing in a Corporate Controller, Accounting Manager, and Inventory Manager to restore proper oversight.
Introduced a formal FP&A function and educated leadership on its role in accurate pricing and strategic decision-making.
Addressed treasury risks: restructured cheque issuance, escalated IT security gaps enabling vendor email fraud.
Outcomes
$20m resolved
$20m resolved
$20m resolved
Inventory discrepancy fully corrected after five years of accumulation.
ERP live
$20m resolved
$20m resolved
Fixed assets automated and integrated into the AP workflow for the first time.
Reliable financials
Reliable financials
Reliable financials
Management no longer reliant on Excel estimates. ERP now the source of truth.
FP&A established
Reliable financials
Reliable financials
Structured budgeting and forecasting introduced for the first time in company history.
The finance department is the most important function within any organization. Without a strong finance function, you cannot accurately price your product — because you will not fully understand your own cost structure.
Parvinder Dhardwar
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