ACCT 2212 Forensic Business Investigation

Required:

1. Use the fraud triangle and fraud scale to explain the fraud committed by Sonya Causer at Clive Peeters Ltd. (15 marks).

2. Assume Clive Peeters Ltd is a company registered in Singapore and Sonya Causer committed the fraud in Singapore, what evidence would you need to acquire to prove the fraud offence ‘falsification of accounts’ (Section 477A Penal Code) (5 marks).

3. Do you think the fraud committed by Sonya Causer caused the collapse of Clive Peeters Ltd? Justify your opinion, stating any assumptions and/or limitations to your opinion. (10 marks).

4. Analyse the f inancial statements f o r FY2008 and FY2009 using the analytical methods below and discuss any material red flags which may be revealed by each analytical method. Please show all calculations (25 marks):

Analytical methods:

(a) Horizontal Analysis

(b) Vertical Analysis.

(c) Ratio Analysis (select any five key ratios only)

(d) Beneish ratios.

(e) M-scores using both the five variable and eight variable models.

(15 + 5 + 10+ 25 = 55 marks)

5. Up to a maximum of 5 marks will be awarded for quality. That means the assignment is formatted appropriately, no spelling errors and no grammatical errors. Please note that RMIT University Academic Integrity policy applies to all written work, including this assignment. The policy can be viewed here http://www1.rmit.edu.au/students/academic-integrity. (Total 15+ 5 + 10+ 25 + 5 = 60 marks)

Answer to Question 1:

The individuals could be motivated to conduct fraud due to financial pressures, work pressures or vices. In addition, the fraud perpetrators could be motivated through perceived opportunity for committing fraud and the ability to rationalise their deeds (Bhasin 2015). The fraud triangle comprises of three constituents to commit frauds and these include perceived pressure, perceived opportunity and technique of rationalising the fraud. With the help of fraud triangle, it is possible to determine the motives, opportunities and causes, which an individual possesses while committing fraud. Thus, the application of fraud triangle would help to concentrate on those organisational areas for detecting and preventing fraud.

The fraud incident of Clive Peeters Limited could be related with the above-depicted fraud triangle and scale and these are briefly discussed as follows:

Perceived pressure:

The perceived pressure on the individual is the motivation behind the crime, which could arise due to financial pressure or workplace pressure. The most common forms of financial pressure include gambling debt and lifestyle maintenance (Gbegi and Adebisi 2014). In this case, Sonya Causer, the payroll manager of Clive Peeters Limited, has spent nearly a year of the business earnings in nine properties located in Australia. In this case, the lifestyle maintenance could be considered as the perceived pressure on the individual.

Perceived opportunity:

This is the technique through an individual would be able to commit fraud. In case of Clive Peeters Limited, Ms Causer has falsified the payroll records of the organisation by transferring its cash availability to her personal bank account. In order to safeguard her actions, Ms Causer has modified the payroll records of the organisation.
Rationalisation:

This is the final phase, in which the fraudster finds ways to justify, which is acceptable to her internal moral compass (Kumar 2017). In case of Clive Peeters Limited, Ms Causer has aimed to falsify the financial records of the organisation by modifying the figures on internal accounting systems. In order to protect herself, Ms Causer has provided an explanation that she falsified the accounting ledger entries for helping the organisation.

Answer to Question 2:

It is assumed that Sonya Causer has committed the fraud in Singapore with the presumption that Clive Peteers Limited is a Singaporean firm. Under such scenario, in order to prove the falsification of accounts, Section 477A, Penal Code of Singapore could be used to conduct the same. According to this section, any person with an intention to defraud destroys, conceals or falsifies any book for his/her employer would be punished for a sentence term of 10 years or fine or both (Lillis et al. 2016). In order to prove the guilt of Sonya Causer, Clive Peteers Limited could obtain electronic records depicting the account falsification to accuse the person as guilty. The major elements need to support this charge include the passing of false entry in company accounts with full willingness and fraudulent intent (Seda and Kramer 2014).