Reflective Writing Task - Blog #5

Reflective Writing Task - Blog #5

I agree with the statement that an important part of the forensic accounting role is the quantification of damages in the civil courts when a person has been wronged. 

According to the Forensic CPA Society, engagement relating to civil law disputes includes;

• The calculation and the quantification of losses and economic damages
• Any disagreements relating to company acquisitions, for example of breach of warranties, and
• Business valuation, (n.d.).

Upon my research into the complexity of the forensic accounting role when considering civil action law, I came across the Labelmakers Group Pty Ltd v LL Force Pty Ltd [2012] FCA 512 case.  Labelmakers claimed a number of employees were in conflict of their contractual and fiduciary obligations to the company, (Federal Court of Australia, 2012). The forensic accountants assigned to this case were responsible for the quantification of damages based upon the applicants claim for compensation for a loss on profit on multiple counts.  

Following on from this example, a forensic accountant must also consider different elements to the law of damages, including taxation.  In the case stated above, to ensure a true figure was derived in relation to the calculation of the damages, it is required taxation be accounted for, (Hines, 2008).  

References

Labelmakers Group Pty Ltd v LL Force Pty Ltd (No 2) [2012] FCA 512. (2012). Federal Court of Australia. Retrieved from https://jade.io/article/265542

Forensic CPA Society. (n.d.) What is a Forensic Accountant? Accessed April 10, 2017. https://www.fcpas.org/about-us/what-is-a-forensic-accountant/

Hines, M. (2008). Tax Implications of Litigation. Victorian Bar Professional Standards Scheme. Retrieved from http://www.deverslist.com.au/Tax%20Implications%20of%20Litigation.pdf

Reflective Writing Task – Blog #4

Reflective Writing Task - Blog #4

I agree with the statement that strict or vicarious liability is the only way to make directors and senior management serious about minimizing fraud, bribery and corruption. 

During my research I came across the Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2016] case.  A manager at Pioneer was authorised as part of her employment to make customer redraws via the company’s software system.  This employee made multiple fraudulent redraws from customer accounts into her husband’s account.  The court held Pioneer liable on the basis of vicarious liability.  Despite executives of Pioneer having nothing to do with the fraud, the circumstances illustrate a very close connection between the fraud committed and the acts of employment.  Her fraud was only possible due to her management authority and access to the software system, (Young, 2016).

Vicarious and strict liability attempts to address incidences of crime by making executives more accountable for employee actions.  Executives may be willing to spend more capital on corporate and IT governance mechanisms to reduce the threat of crime.

The major categories of crime include;

1. White Collar crime (e.g. false accounting, money laundering, theft)
2. Organised crime (e.g. illegal drugs, illegal services)
3. Computer crime (e.g. unauthorised access, internet fraud)
4. Regulatory, Corporate and Compliance Offences (e.g. insider trading, competition offences) (Latimer, 2012, p.96).

References

Latimer, P. (2012). Australian Business Law (31^st Ed.). Sydney, NSW: CCH Australia Limited. 

Young, S. (2016). Federal court affirms an employer’s vicarious liability for fraudulent acts of employees. Moray & Agnew Lawyers. Retrieved from http://insurance.moray.com.au/publication/can-a-mortgage-intermediary-be-vicariously-liable-for-the-fraudulent-acts-of-its-employee/. 

Reflective Writing Task – Blog #3

I agree with the statement that it is extremely important for forensic accountants to be familiar with the law.  Public interests are at threat if forensic accountants are ignorant of the rules of evidence.

I recently read an article about the ASIC vs Rich case that was settled in 2009.  During the proceedings of this case the Supreme Court of NSW identified a number of issues regarding the expert reports, specifically a report prepared by Paul Carter (a forensic accounting partner at PWC). The report prepared by Carter was deemed inadmissible for the purposes of the relevant proceedings, (Paul, 2017).  Carter failed to “disclose the real factual basis and true reasoning process of the opinions expressed was inadmissible because”, (Small, 2005).  This is a clear example of how a forensic accountant was ignorant of the rules of evidence.  

There are two elements that encompasses a forensic accounts role, investigation and litigation support.  A forensic account must be able to gather evidence, ensuring this evidence is not mishandled (for example distorting original copies), and then be able to present this evidence to a court of law.  The legal requirements that compromise the role of a forensic accountant can sometimes stand as the difference between a guilty and non-guilty verdict.

References

Paul, I. (2017). Forensic Accounting Reports - Sourcing of Information and Independence. FindLaw Australia. Retrieved from http://www.findlaw.com.au/articles/693/forensic-accounting-reports-8211-sourcing-of-infor.aspx

Small, S. (2005). Admissibility of expert evidence. Australian Government Solicitor. Retrieved from http://www.ags.gov.au/publications/express-law/el22.pdf

Reflective Writing Task – Blog #2

I agree with the statement that governance approaches such as COBIT 5 IT Governance, in relation to information security and risk, should address all potential threats to an organisation.  I also agree that as organisations increase their usage of mobile devices and social media, in a business context, the potential risk of fraud also increases.

The COBIT 5 framework addresses IT threats to an organisation by building a set of governance and management enablers to support the achievement of IT-related goals and information security measures, (ISACA, 2012).  It is essential that a holistic approach to IT Governance is taken within an enterprise to ensure a balanced and stable system is in place.

Whilst at the university campus library, I proceeded to leave my laptop unattended for a short period of time, I had no security on my device. During this time an unknown person inserted a USB into my device and not only stole, by deleted my assignment documents for that semester.

Through the holistic implementation of this framework, an organisation can;

-          Improve their integration of information security within the enterprise

-          Make informed risk decisions and raise awareness amongst employees

-          Improve the prevention and detection of fraud. 

References

ISACA. (2012). COBIT 5: A Business Framework for the Governance and Management of Enterprise IT. Retrieved from http://www.isaca.org/COBIT/Pages/COBIT-5-Framework-product-page.aspx