Investigations
A thorough investigation requires more than the completion of a standard checklist. It requires the information available from the company’s books and records, financial statements, bank accounts and explanations provided by directors to be considered together, critically assessed and tested for consistency and plausibility.
Grove Chambers can undertake comprehensive investigations for SIP 2 and CDDA/DCRS purposes, either as a standalone assignment or as part of wider case support.
Financial and Accounting Review
The investigation can include side-by-side analysis of profit and loss accounts and balance sheets across successive accounting periods, identifying significant movements, trends and areas requiring further enquiry.
Particular consideration can be given to:
- movements in assets and liabilities;
- significant changes in amounts owed to creditors;
- the acquisition or disposal of assets;
- transactions involving directors, shareholders and other connected parties;
- dividends and other distributions; and
- indicators of tax avoidance arrangements or other unusual transactions.
Where appropriate, the apparent profit or loss disclosed by the deficiency account can also be subjected to a plausibility assessment, considered against the company’s historical financial performance and other available information.
Bank Statements Analysis
Bank statements can provide some of the most useful financial evidence available when investigating a company’s affairs.
Where transaction data has already been extracted using the insolvency practice’s own statement-conversion facilities, including systems such as Prism339, Grove Chambers can work directly from that raw data. Alternatively, bank statement information can be analysed as part of the wider investigation.
The analysis can be used to identify and examine matters including:
- Large or unusual transactions
- Regular or recurring payments
- Payments to connected and unconnected parties
- Potential unlawful dividends or distributions
- Asset acquisitions and disposals
- Other transactions warranting explanation or further enquiry
Use of AI and Analytical Tools
Where appropriate and beneficial, AI-assisted analysis may be used to complement conventional investigative techniques. This can assist with the analysis of larger datasets, the identification of patterns and anomalies, and comparison of financial information against relevant market trends or industry norms.
AI is used as an analytical aid rather than as a substitute for professional judgement. Findings remain subject to critical review and assessment against the underlying evidence.
Investigation Outcomes
At the conclusion of the review, Grove Chambers can prepare a concise combined SIP 2 and CDDA outcome report suitable for retention on the case file and capable of supporting the insolvency practitioner’s response should further information subsequently be sought by the Insolvency Service.
Where the investigation identifies matters requiring further attention, a suggested workplan for the next stages of the investigation can also be provided, identifying further information or evidence that should be obtained and matters which may warrant consideration as potential recoveries or claims.