The Fraud Triangle Constituents
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.
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Figure 1: Fraud Triangle
(Source: Boritz, Carnaghan and Alencar 2014)
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:
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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.
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).
3. The accounting fraud of Sonya Causer, the payroll manager of Clive Peeters Limited, has played the biggest role in the collapse of the organisation. The person has falsified the accounts and transferred $20 million cash into her bank account. Such fraud is further followed by fall in sales during the past month, which is another reason behind collapse of the organisation. In addition, poor liquidity position of the company could be adjudged as another reason behind such collapse (Williams 2014).Due to such condition, the management of the organisation has sold its 44 stores. Harvey Norman has purchased its retail store, operational processes and stocks for $55 millions. Thus, these above-mentioned factors have lead to the collapse of Clive Peeters Limited together.
Application of Fraud Triangle in Detecting and Preventing Fraud
4. a)
|
Particulars
|
|
|
Horizontal
|
|
2008 ($’000)
|
2009 ($’000)
|
% Change
|
|
Revenue
|
534,883
|
496,859
|
-7.11%
|
|
Cost of Sales
|
393,795
|
375,969
|
-4.53%
|
|
Gross Profit
|
141,088
|
120,890
|
-14.32%
|
|
Other revenue
|
38,271
|
36,622
|
-4.31%
|
|
Other income
|
22
|
–
|
-100.00%
|
|
Distribution expenses
|
10,360
|
10,121
|
-2.31%
|
|
Occupancy expenses
|
26,307
|
30,315
|
15.24%
|
|
Administration expenses
|
33,239
|
32,840
|
-1.20%
|
|
Sales and marketing expenses
|
80,288
|
75,693
|
-5.72%
|
|
Finance costs
|
3,011
|
3,421
|
13.62%
|
|
Misappropriation of expense
|
–
|
4,815
|
|
|
Other expenses
|
11,482
|
11,653
|
1.49%
|
|
Profit before income tax expense
|
14,694
|
(11,346)
|
-177.22%
|
|
Income tax expense
|
4,421
|
2,374
|
-46.30%
|
|
Profit for the period
|
10,273
|
(8,972)
|
-187.34%
|
|
Earnings per share:
|
|
|
|
|
Basic
|
8
|
(7)
|
-187.65%
|
|
Diluted
|
8.1
|
(7.1)
|
-187.65%
|
Table 1: Horizontal analysis of income statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Horizontal
|
|
2008 ($’000)
|
2009 ($’000)
|
% Change
|
|
Current Assets:
|
|
|
|
|
Cash and cash equivalents
|
17,083
|
4,561
|
-73.30%
|
|
Trade and other receivables
|
31,952
|
27,096
|
-15.20%
|
|
Inventories
|
131,388
|
108,080
|
-17.74%
|
|
Other
|
12,599
|
19,116
|
51.73%
|
|
Total Current Assets
|
193,022
|
158,853
|
-17.70%
|
|
Non-Current Assets:
|
|
|
|
|
Plant and equipment
|
23,284
|
21,345
|
-8.33%
|
|
Brand names
|
10,600
|
10,600
|
0.00%
|
|
Goodwill
|
24,102
|
24,170
|
0.28%
|
|
Other intangibles
|
427
|
1,061
|
148.48%
|
|
Other non-current financial assets
|
12
|
12
|
0.00%
|
|
Deferred tax assets
|
3,561
|
4,137
|
16.18%
|
|
Total Non-Current Assets
|
61,986
|
61,325
|
-1.07%
|
|
Total Assets
|
255,008
|
220,178
|
-13.66%
|
|
Non-Current Liabilities:
|
|
|
|
|
Deferred tax liabilities
|
2,460
|
2,460
|
0.00%
|
|
Trade and other payables
|
3,910
|
4,182
|
0.0695652
|
|
Provisions
|
368
|
425
|
15.49%
|
|
Borrowings
|
30,066
|
32,500
|
8.10%
|
|
Total Non-Current Liabilities
|
36,804
|
39,567
|
7.51%
|
|
Current Liabilities:
|
|
|
|
|
Trade and other payables
|
114,672
|
91,351
|
-20.34%
|
|
Current tax liabilities
|
1,058
|
–
|
-100.00%
|
|
Provisions
|
5,521
|
5,791
|
4.89%
|
|
Borrowings
|
16,742
|
14,066
|
-15.98%
|
|
Total Current Liabilities
|
137,993
|
111,208
|
-19.41%
|
|
Total Liabilities
|
174,797
|
150,775
|
-13.74%
|
|
Net Assets
|
80,211
|
69,403
|
-13.47%
|
|
Equity:
|
|
|
|
|
Issued capital
|
54,578
|
54,578
|
0.00%
|
|
Equity settled employee benefits reserve
|
–
|
69
|
|
|
Retained earnings
|
25,633
|
14,756
|
-42.43%
|
|
Total Equity
|
80,211
|
69,403
|
-13.47%
|
Table 2: Horizontal analysis of balance sheet statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Horizontal
|
|
2008 ($’000)
|
2009 ($’000)
|
% Change
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
Receipts from customers
|
618,758
|
595,371
|
-3.78%
|
|
Payments to suppliers and employees
|
(599,846)
|
(584,393)
|
-2.58%
|
|
Proceeds from insurance
|
1,713
|
848
|
-50.50%
|
|
Interest received
|
412
|
185
|
-55.10%
|
|
Interest and other costs of finance paid
|
(3,011)
|
(3,421)
|
13.62%
|
|
Tax paid
|
(4,811)
|
626
|
-113.01%
|
|
Misappropriated funds
|
(3,871)
|
(14,677)
|
279.15%
|
|
Net cash provided by operating activities
|
9,344
|
(5,461)
|
-158.44%
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Payments for businesses
|
(6,410)
|
–
|
-100.00%
|
|
Proceeds from disposal of plant and equipment
|
37
|
53
|
43.24%
|
|
Payment for intangibles
|
(182)
|
(877)
|
381.87%
|
|
Payment for plant and equipment
|
(8,619)
|
(4,090)
|
-52.55%
|
|
Net cash used in investing activities
|
(15,174)
|
(4,914)
|
-67.62%
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from borrowings
|
20,000
|
–
|
-100.00%
|
|
Repayment of borrowings
|
(679)
|
(242)
|
-64.36%
|
|
Dividends paid
|
(7,620)
|
(1,905)
|
-75.00%
|
|
Net cash provided by financing activities
|
11,701
|
(2,147)
|
-118.35%
|
|
Net cash increase/decrease in cash held
|
5,871
|
(12,522)
|
-313.29%
|
|
Cash at the beginning of the financial year
|
11,212
|
17,083
|
52.36%
|
|
Cash at the end of the financial year
|
17,083
|
4,561
|
-73.30%
|
|
|
|
|
Table 3: Horizontal analysis of cash flow statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Horizontal
|
|
2008 ($’000)
|
2009 ($’000)
|
% Change
|
|
Retained Earnings:
|
|
|
|
|
Retained earnings at the beginning of the year
|
22,980
|
25,633
|
11.54%
|
|
Net profit attributable to members of the parent entity
|
10,273
|
(8,972)
|
-187.34%
|
|
Dividends Paid
|
(7,620)
|
(1,905)
|
-75.00%
|
|
Retained earnings at the end of the year
|
25,633
|
14,756
|
-42.43%
|
|
Issued Capital:
|
|
|
|
|
Share capital at the beginning of the year
|
54,578
|
54,578
|
0.00%
|
|
Share capital at the end of the year
|
54,578
|
54,578
|
0.00%
|
|
Total recognised income and expense for the year:
|
|
|
|
|
Profit for the year
|
10,273
|
(8,972)
|
-187.34%
|
|
Total income and expense for the period
|
10,273
|
(8,972)
|
-187.34%
|
Table 4: Horizontal analysis of statement of changes in equity of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
4. b)
|
Particulars
|
|
|
Vertical
|
|
2008 ($’000)
|
2009 ($’000)
|
% change in 2008
|
% change in 2009
|
|
Revenue
|
534,883
|
496,859
|
379.11%
|
411.00%
|
|
Cost of Sales
|
393,795
|
375,969
|
-279.11%
|
-311.00%
|
|
Gross Profit
|
141,088
|
120,890
|
100.00%
|
100.00%
|
|
Other revenue
|
38,271
|
36,622
|
260.45%
|
-322.77%
|
|
Other income
|
22
|
–
|
0.15%
|
0.00%
|
|
Distribution expenses
|
10,360
|
10,121
|
-70.50%
|
89.20%
|
|
Occupancy expenses
|
26,307
|
30,315
|
-179.03%
|
267.19%
|
|
Administration expenses
|
33,239
|
32,840
|
-226.21%
|
289.44%
|
|
Sales and marketing expenses
|
80,288
|
75,693
|
-546.40%
|
667.13%
|
|
Finance costs
|
3,011
|
3,421
|
-20.49%
|
30.15%
|
|
Misappropriation of expense
|
–
|
4,815
|
0.00%
|
42.44%
|
|
Other expenses
|
11,482
|
11,653
|
-78.14%
|
102.71%
|
|
Profit before income tax expense
|
14,694
|
(11,346)
|
143.04%
|
126.46%
|
|
Income tax expense
|
4,421
|
2,374
|
-43.04%
|
26.46%
|
|
Profit for the period
|
10,273
|
(8,972)
|
100.00%
|
100.00%
|
|
Earnings per share:
|
|
|
|
|
|
Basic
|
8
|
(7)
|
|
|
|
Diluted
|
8.1
|
(7.1)
|
|
|
Table 5: Vertical analysis of income statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Vertical
|
|
2008 ($’000)
|
2009 ($’000)
|
% change in 2008
|
% change in 2009
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
17,083
|
4,561
|
8.85%
|
2.87%
|
|
Trade and other receivables
|
31,952
|
27,096
|
16.55%
|
17.06%
|
|
Inventories
|
131,388
|
108,080
|
68.07%
|
68.04%
|
|
Other
|
12,599
|
19,116
|
6.53%
|
12.03%
|
|
Total Current Assets
|
193,022
|
158,853
|
75.69%
|
72.15%
|
|
Non-Current Assets:
|
|
|
|
|
|
Plant and equipment
|
23,284
|
21,345
|
37.56%
|
34.81%
|
|
Brand names
|
10,600
|
10,600
|
17.10%
|
17.28%
|
|
Goodwill
|
24,102
|
24,170
|
38.88%
|
39.41%
|
|
Other intangibles
|
427
|
1,061
|
0.69%
|
1.73%
|
|
Other non-current financial assets
|
12
|
12
|
0.02%
|
0.02%
|
|
Deferred tax assets
|
3,561
|
4,137
|
5.74%
|
6.75%
|
|
Total Non-Current Assets
|
61,986
|
61,325
|
24.31%
|
27.85%
|
|
Total Assets
|
255,008
|
220,178
|
100.00%
|
100.00%
|
|
Non-Current Liabilities:
|
|
|
|
|
|
Deferred tax liabilities
|
2,460
|
2,460
|
6.68%
|
6.22%
|
|
Trade and other payables
|
3,910
|
4,182
|
10.62%
|
10.57%
|
|
Provisions
|
368
|
425
|
1.00%
|
1.07%
|
|
Borrowings
|
30,066
|
32,500
|
81.69%
|
82.14%
|
|
Total Non-Current Liabilities
|
36,804
|
39,567
|
21.06%
|
26.24%
|
|
Current Liabilities:
|
|
|
|
|
|
Trade and other payables
|
114,672
|
91,351
|
83.10%
|
82.14%
|
|
Current tax liabilities
|
1,058
|
–
|
0.77%
|
0.00%
|
|
Provisions
|
5,521
|
5,791
|
4.00%
|
5.21%
|
|
Borrowings
|
16,742
|
14,066
|
12.13%
|
12.65%
|
|
Total Current Liabilities
|
137,993
|
111,208
|
78.94%
|
73.76%
|
|
Total Liabilities
|
174,797
|
150,775
|
100.00%
|
100.00%
|
|
Net Assets
|
80,211
|
69,403
|
100.00%
|
100.00%
|
|
Equity:
|
|
|
|
|
|
Issued capital
|
54,578
|
54,578
|
68.04%
|
78.64%
|
|
Equity settled employee benefits reserve
|
–
|
69
|
0.00%
|
0.10%
|
|
Retained earnings
|
25,633
|
14,756
|
31.96%
|
21.26%
|
|
Total Equity
|
80,211
|
69,403
|
100.00%
|
100.00%
|
Table 6: Vertical analysis of balance sheet statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Vertical
|
|
2008 ($’000)
|
2009 ($’000)
|
% change in 2008
|
% change in 2009
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
Receipts from customers
|
618,758
|
595,371
|
6621.98%
|
-10902.23%
|
|
Payments to suppliers and employees
|
(599,846)
|
(584,393)
|
-6419.58%
|
10701.21%
|
|
Proceeds from insurance
|
1,713
|
848
|
18.33%
|
-15.53%
|
|
Interest received
|
412
|
185
|
4.41%
|
-3.39%
|
|
Interest and other costs of finance paid
|
(3,011)
|
(3,421)
|
-32.22%
|
62.64%
|
|
Tax paid
|
(4,811)
|
626
|
-51.49%
|
-11.46%
|
|
Misappropriated funds
|
(3,871)
|
(14,677)
|
-41.43%
|
268.76%
|
|
Net cash provided by operating activities
|
9,344
|
(5,461)
|
100.00%
|
100.00%
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
Payments for businesses
|
(6,410)
|
–
|
42.24%
|
0.00%
|
|
Proceeds from disposal of plant and equipment
|
37
|
53
|
-0.24%
|
-1.08%
|
|
Payment for intangibles
|
(182)
|
(877)
|
1.20%
|
17.85%
|
|
Payment for plant and equipment
|
(8,619)
|
(4,090)
|
56.80%
|
83.23%
|
|
Net cash used in investing activities
|
(15,174)
|
(4,914)
|
100.00%
|
100.00%
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
Proceeds from borrowings
|
20,000
|
–
|
170.93%
|
0.00%
|
|
Repayment of borrowings
|
(679)
|
(242)
|
-5.80%
|
11.27%
|
|
Dividends paid
|
(7,620)
|
(1,905)
|
-65.12%
|
88.73%
|
|
Net cash provided by financing activities
|
11,701
|
(2,147)
|
100.00%
|
100.00%
|
|
Net cash increase/decrease in cash held
|
5,871
|
(12,522)
|
34.37%
|
-274.55%
|
|
Cash at the beginning of the financial year
|
11,212
|
17,083
|
65.63%
|
374.55%
|
|
Cash at the end of the financial year
|
17,083
|
4,561
|
100.00%
|
100.00%
|
Table 7: Vertical analysis of cash flow statement of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
|
Particulars
|
|
|
Vertical
|
|
2008 ($’000)
|
2009 ($’000)
|
% change in 2008
|
% change in 2009
|
|
Retained Earnings:
|
|
|
|
|
|
Retained earnings at the beginning of the year
|
22,980
|
25,633
|
89.65%
|
173.71%
|
|
Net profit attributable to members of the parent entity
|
10,273
|
(8,972)
|
40.08%
|
-60.80%
|
|
Dividends Paid
|
(7,620)
|
(1,905)
|
-29.73%
|
-12.91%
|
|
Retained earnings at the end of the year
|
25,633
|
14,756
|
100.00%
|
100.00%
|
|
Issued Capital:
|
|
|
|
|
|
Share capital at the beginning of the year
|
54,578
|
54,578
|
100.00%
|
100.00%
|
|
Share capital at the end of the year
|
54,578
|
54,578
|
100.00%
|
100.00%
|
|
Total recognised income and expense for the year:
|
|
|
|
|
|
Profit for the year
|
10,273
|
(8,972)
|
100.00%
|
100.00%
|
|
Total income and expense for the period
|
10,273
|
(8,972)
|
100.00%
|
100.00%
|
Table 8: Vertical analysis of statement of changes in equity of Clive Peeters Limited for the years 2008 and 2009
(Source: As created by author)
Income statement:
From the horizontal and vertical analyses of income statement, it has been found that the net profit for the organisation has fallen sharply in 2009 from $14,694,000 in 2008 to ($11,346,000) in 2009. This is due to the fall in overall revenues and rise in occupancy expenses. As a result, it has been struggling to maintain its position in the Australian market.
Balance sheet statement:
From the horizontal and vertical analyses of balance sheet statement, it has been found that the organisation has experienced a significant fall in net assets from $80,211 in 2008 to $69,403 in 2009. The same trend is observed in case of retained earnings, as the amount has declined to $14,756 in 2009 from $25,633 in 2008. This depicts that the fraudulent act of Sonya Causer has increased the amount of debt burden, which has lowered down its overall profitability (Taha 2016).
Cash flow statement:
From the horizontal and vertical analyses of cash flow statement, it has been found that the net cash inflows from operating activities have declined largely by -158.44% in 2009 due to higher amount of misappropriated funds. As a result, it has reduced the amount of cash availability of the organisation, which has further the amount of dividend distribution.
Statement of changes in equity:
The horizontal and vertical analyses clearly inherit that the organisation has experienced a fall in net profit due to which the shareholders have earned minimised return on investments. This has further lowered down the amount of retained earnings for the organisation, thus, creating difficulties to carry out its day-to-day operations.
4. c)
|
Particulars
|
Details
|
2008
|
2009
|
|
Revenue
|
A
|
534,883
|
496,859
|
|
Cost of Sales
|
B
|
393,795
|
375,969
|
|
Gross Profit
|
C
|
141,088
|
120,890
|
|
Net Profit
|
D
|
10,273
|
(8,972)
|
|
Current Assets
|
E
|
193,022
|
158,853
|
|
Current Liabilities
|
F
|
137,993
|
111,208
|
|
Opening inventory
|
G
|
98,906
|
131,388
|
|
Closing inventory
|
H
|
131,388
|
108,080
|
|
Average inventory
|
I=(G+H)/2
|
115,147
|
119,734
|
|
Gross Margin
|
C/A
|
26.38%
|
24.33%
|
|
Net Margin
|
D/A
|
1.92%
|
-1.81%
|
|
Current Ratio
|
E/F
|
1.40
|
1.43
|
|
Quick Ratio
|
(E-G)/F
|
0.45
|
0.46
|
|
Inventory Turnover
|
365/(B/I)
|
106.73
|
116.24
|
Table 9: Five key ratios of Clive Peeters Limited for the years 2008-2009
(Source: As created by author)
According to the above table, it has been evident that both gross margin and net margin of the organisation has fallen sharply. This is because of the declining revenue margin and the increasing operational expenses. In addition, the organisation has been struggling from poor liquidity position, as depicted out through current and quick ratios, due to rising amount of debt burden and fall in working capital base. Finally, Clive Peeters Limited has experienced a fall in market demand, as longer time is taken to release its inventory. Hence, from the above evaluation, it is evident that the company is not able to maintain its competitive edge in the Australian market due to falling revenue, market demand and increasing debt burden.
4. d)
|
Particulars
|
Details
|
Basis
|
2008
|
2009
|
|
Receivables
|
A
|
|
31952
|
27096
|
|
Sales
|
B
|
|
534883
|
496859
|
|
Days Sales in Receivables Index (DSRI)
|
A/B
|
Current year/Previous year
|
0.91
|
|
Gross Profit
|
C
|
|
141088
|
120890
|
|
Gross Margin Index (GMI)
|
C/B
|
Previous year/Current year
|
1.08
|
|
Non-Current Assets
|
D
|
|
61986
|
61325
|
|
Plant and equipment
|
E
|
|
23284
|
21345
|
|
Total Assets
|
F
|
|
255008
|
220178
|
|
Asset Quality Index (AQI)
|
(D-E)/F
|
Current year/Previous year
|
1.20
|
|
Sales Growth Index (SGI)
|
B
|
Current year/Previous year
|
-0.07
|
|
Depreciation
|
G
|
|
8016
|
11747
|
|
Plant and equipment
|
H
|
|
9112
|
11841
|
|
Depreciation Index (DEPI)
|
G/(G+H)
|
Previous year/Current year
|
0.94
|
|
Sales, general and administrative expense
|
I
|
|
113527
|
108533
|
|
Sales, general and administrative expense index (SGAI)
|
I/B
|
Current year/Previous year
|
1.03
|
|
Current Assets
|
J
|
|
193022
|
158853
|
|
Current Liabilities
|
K
|
|
137993
|
111208
|
|
Working Capital
|
L=(I-K)
|
|
55029
|
47645
|
|
Cash
|
M
|
|
17083
|
4561
|
|
Depreciation
|
N
|
|
8016
|
11747
|
|
Total Accruals to total assets (TATA)
|
(L-M)/N
|
Current year/Previous year
|
1.05
|
|
Total Debt
|
O
|
36804
|
39567
|
|
|
Total Assets
|
P
|
255008
|
220178
|
|
|
Leverage Index
|
O/P
|
Current year/Previous year
|
1.25
|
Table 10: Beneish ratios of Clive Peeters Limited for the years 2008-2009
(Source: As created by author)
4. e)
In order to achieve the 5-variable M-score, the following formula has been applied:
M= -6.065 + 0.823*DSRI + 0.906*GMI + 0.593*AQI + 0.717*SGI + 0.107*DEPI
|
|
-6.065
|
|
|
0.823
|
|
|
0.906
|
|
|
0.593
|
|
|
0.717
|
|
|
0.107
|
|
DSRI
|
0.91
|
|
GMI
|
1.08
|
|
AQI
|
1.2
|
|
SGI
|
-0.07
|
|
DEPI
|
0.94
|
|
M-Score
|
-3.5756
|
8-variable M-score:
In order to achieve the 5-variable M-score, the following formula has been applied:
M = -4.84 + 0.92*DSRI + 0.528*GMI + 0.404*AQI + 0.892*SGI + 0.115*DEPI – 0.172*SGAI + 4.679*TATA – 0.327*LVGI
|
|
-4.84
|
|
|
0.92
|
|
|
0.528
|
|
|
0.404
|
|
|
0.892
|
|
|
0.115
|
|
|
0.172
|
|
|
4.679
|
|
|
-0.327
|
|
DSRI
|
0.91
|
|
GMI
|
1.08
|
|
AQI
|
1.2
|
|
SGI
|
-0.07
|
|
DEPI
|
0.94
|
|
SGAI
|
1.03
|
|
TATA
|
1.05
|
|
LVGI
|
1.25
|
|
M-Score
|
2.24244
|
In case, if the score obtained is above -1.78, it denotes that the firm is a strong manipulator. For Clive Peeters Limited, the score is well above the mentioned one, which again validates the falsification of accounts on the part of Sonya Causer.
References:
Bhasin, M.L., 2015. An empirical investigation of the relevant skills of forensic accountants: experience of a developing economy.
Boritz, J.E., Carnaghan, C. and Alencar, P.S., 2014. Business modeling to improve auditor risk assessment: An investigation of alternative representations. Journal of Information Systems, 28(2), pp.231-256.
Gbegi, D.O. and Adebisi, J.F., 2014. Forensic accounting skills and techniques in fraud investigation in the Nigerian public sector. Mediterranean Journal of Social Sciences, 5(3), p.243.
Kumar, M., 2017. Investigation of Credit Risk based on Indian Firm Performance. International Journal of Risk and Contingency Management (IJRCM), 6(2), pp.35-46.
Lillis, D., Becker, B., O’Sullivan, T. and Scanlon, M., 2016. Current Challenges and Future Research Areas for Digital Forensic Investigation. arXiv preprint arXiv:1604.03850.
Seda, M. and Kramer, B.K.P., 2014. An examination of the availability and composition of forensic accounting education in the United States and other countries. Journal of Forensic & Investigative Accounting, 6(1), pp.1-46.
Taha, K.H., 2016. Extracting Useful Information from Mobile Communication Data for Forensic Investigation. Advanced Science Letters, 22(10), pp.3100-3104.
Williams, J.W., 2014. The private eyes of corporate culture: the forensic accounting and corporate investigation industry and the production of corporate financial security. In Corporate Security in the 21st Century (pp. 56-77). Palgrave Macmillan UK.
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