Big Whistleblower Predictions for 2015

http://blogs.wsj.com/riskandcompliance/2015/01/23/the-big-whistleblower-predictions-for-2015/?mod=wsj_rchome_rcreport

Posted by CHUA Sing Nee, Year 3 undergrad at the School of Social Science, Singapore Management University

About a year ago, we ran a post positing that 2014 would be huge for corporate whistleblowers on a number of fronts. The experts with whom we spoke then hit the nail on the head: every prediction came true. They were right about more Securities and Exchange Commission whistleblower awards arriving (including one for a record $30 million-plus), False Claims Act cases hitting a new record and courts further defining who counts as a whistleblower. Here what some whistleblower experts think may happen in the year ahead: Continue reading

SEC Fines Company, Former Exec for FCPA Violations

http://blogs.wsj.com/riskandcompliance/2015/01/22/sec-fines-tampa-company-executive-for-fcpa-violations/

Posted by CHUA Sing Nee, Year 3 undergrad at the School of Social Science, Singapore Management University

The Securities and Exchange Commission said Thursday it reached settlements with a Tampa, Fla.-based engineering firm and its subsidiary’s former president over allegations of bribery to secure Qatari government contracts. Continue reading

Survival in the Asian Capital Jungle: Who Knows What When + Remembering Accounting Superhero Abraham Briloff (Week 1 of SMU Course Accounting Fraud in Asia)

Dear Friends,

Survival in the Asian Capital Jungle: Who Knows What When – Remembering Accounting Superhero Abraham Briloff

BriloffDecember is an unrelenting month – December last year took away from the world an accounting superhero, Professor Abraham Briloff. Right up until about a month before his death on Dec 12 at age 96, Abe was unrelenting in alerting Barron’s about some accounting fraud he had uncovered that was hidden in corporate America’s financial statements – a lifelong endeavor he persisted for 45 years since his enlightening “Dirty Pooling” article on July 15, 1968. When financial crisis strikes, Abe’s words become the Generally Accepted Accounting Principles. Even though Abe was legally blind, he could see clearly the accounting issues, having memorized pages of the company’s financials that had been read to him by his daughter Leonore or his grad students at City University of New York’s Baruch College. When asked about his thought process, the grandmaster said, “It begins with some sensitivity as to where the problem might be. Somehow, there’s a serendipity where I know that there’s an issue out there.” Abe elaborates his Process in a Barron’s interview:

“The numbers reverberate in my mind, and then I turn to Leonore and say, ‘Get for me the data in these areas,’ or ‘Read such-and-such to me from whatever document you might find.’ He records his thoughts on tape, on one of the several recorders that he keeps on the desk in his study, and then he reflects further. When he goes to bed, the numbers still dance in his mind, and he keeps a tape recorder beside his bed. It is as if he can see the numbers, much as Beethoven could hear the melodies even though deaf. As new numbers come in, he incorporates them into his thinking, to confirm or reject his original hypothesis. “Something hits. You say, ‘Why is it there?’ Or something that should be there, isn’t there,” he says. He performs the most critical calculations in his head.”

Abe’s heroic commitment to exposing accounting frauds has been a source of inspiration for us when crafting out Accounting Fraud in Asia, an official course in the Singapore Management University (SMU) degree curriculum that will be launched in January 2015. Continue reading

Tone Management

http://eds.a.ebscohost.com.libproxy.smu.edu.sg/ehost/pdfviewer/pdfviewer?sid=5a545e25-fd28-4ab9-92b8-4c1ca45e8578%40sessionmgr4001&vid=4&hid=4105

Tone Management.

Xuan Huang1 Siew Hong Teoh2 Yinglei Zhang3 Source:

Accounting Review. May2014, Vol. 89 Issue 3, p1083-1113. 31p. 11 Charts.

Abstract:

We investigate whether and when firms manage the tone of words in earnings press releases, and how investors react to tone management. We estimate abnormal positive tone, ABTONE, as a measure of tone management from residuals of a tone model that controls for firm quantitative fundamentals such as performance, risk, and complexity. We find that ABTONE predicts negative future earnings and cash flows, is positively associated with upward perception management events, such as, just meeting/beating thresholds, future earnings restatements, SEO, and M&A, and is negatively associated with a downward perception management event, stock option grants. ABTONE has a positive stock return effect at the earnings announcement and a delayed negative reaction in the one and two quarters afterward. Balance sheet constrained firms and older firms are more likely to employ tone management over accruals management. Overall, the evidence is consistent with managers using strategic tone management to mislead investors about firm fundamentals.

Busting graft: Tone from the top is key; How can CEOs build and sustain a graft-free corporate culture in today’s business environment?

http://www.businesstimes.com.sg/views-from-the-top/busting-graft-tone-from-the-top-is-key

Busting graft: Tone from the top is key

26 January 2015

Business Times Singapore

THIS WEEK’S TOPIC: How can CEOs build and sustain a graft-free corporate culture in today’s business environment? Continue reading

Ghost employees and vanishing finances; Indian bureaucrats, some may argue, are second to none in devising newer methods of corruption

http://www.dailypioneer.com/columnists/edit/ghost-employees-and-vanishing-finances.html

Ghost employees and vanishing finances

Joginder Singh

26 January 2015

The Pioneer

India, Jan. 26 — Drawing salaries in the name of workers who have never worked, and issuing subsidies to folks who died many years ago, are just a few of the many ways in which public servants steal from the state exchequer. Indian bureaucrats, some may argue, are second to none in devising newer methods of corruption. Irrespective of the legal definition of corruption practised by public servants, the de facto meaning is this: Get as much money and as many favours as possible for doing just regular work. However, be careful not to get arrested or lose your job (even though the latter is rare). Continue reading

[Flashback] Tesco accounting scandal Q&A: what happens next?

http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11113002/Tesco-accounting-scandal-QandA-what-happens-next.html

Posted by CHEN Liting, Year 3 undergrad at the School of Business, Singapore Management University

Related: [Flashback] Tesco shares could plunge to 140p amid jitters over lengthy fraud probes (Link); Directors are still not properly policing corporate dangers; Tesco Faces Fresh Accounting Investigation; Auditor PWC Gets Unseasonal Greetings for Tesco and Barclays Roles (Link); Study of audit committees shows slow progress on monitoring accounts and risks; Tesco’s accounting issues have highlighted the role of directors in spotting problems (Link)

Tesco accounting scandal Q&A: what happens next?

Tesco shares have fallen by 10pc after warning that profits have been overstated, but there could be worse to come

By Graham Ruddick

10:58AM BST 22 Sep 2014

What exactly has Tesco found?

Dave Lewis, the Tesco chief executive, says he has discovered that profits for the six month to the end of August were overstated by £250m due to the “accelerated recognition of commercial income and delayed accrual of costs”. In other words, Tesco has been paying suppliers later and taking monies from them earlier than it should have. Given that £250m represents roughly a quarter of profits, this suggest the practice was widespread in its UK business. Tesco has launched an investigation into the blackhole. Continue reading