http://www.accaglobal.com/sg/en/discover/ab-articles/business-law/fraud-board.html

Posted by M Laavanya, Year 3 undergrad at the School of Accountancy, Singapore Management University

FRAUD IN THE BOARD

Sacked by Olympus for his stand against financial corruption, ex-CEO Michael Woodford describes what happened when he blew the whistle

This article was first published in the January 2013 International edition of Accounting and Business magazine.

With three decades working for a Japanese camera giant under your belt, you are rewarded for leading the growth of the European arm with promotion to company president – the first non-Japanese national ever to hold the post. The fact your new role starts on April Fool’s Day does not seem an omen. Continue reading →

http://www.bloombergview.com/articles/2015-01-29/penny-stock-pawnbroker-had-a-clever-trick-to-get-paid

Penny Stock Pawnbroker Had a Clever Trick to Get Paid

JAN 29, 2015 5:55 PM EST

By Matt Levine

A sign of a good scam is that it’s hard to tell who’s being scammed. So here is a charming little story about International Capital Group, which agreed to pay $4.3 million to the Securities and Exchange Commission to settle charges of penny-stock misbehavior. ICG basically ran a pawn shop for penny stocks. Lots of founders/promoters/chief executive officers of tiny public companies own lots of stock in their companies, and not much else. And some of them would like to turn that stock into money.

But controlling insiders can’t sell their stock without registering the sales with the SEC. This requires things like, you know, audited financial statements, which can be a problem if you’re a tiny company with dubious financials. Even more important, registration also means disclosure. And when the founder and chief executive officer and majority shareholder of a tiny company publicly announces that he’s dumping all his stock, that … tends to push the stock price down. The trick is to get money for your stock without telling anyone that you’re selling

Continue reading →

http://dealbook.nytimes.com/2015/01/29/how-to-avoid-frauds-in-investments-and-personnel-hires/

How to Avoid Frauds in Investments, and Personnel Hires

By CARSON C. BLOCK

JANUARY 29, 2015 3:07 PM January 29, 2015 3:07 pm 2 Comments

Carson C. Block is the director of research for Muddy Waters, a research and investment firm. He is on Twitter at @muddywatersre

I’m often left scratching my head when seemingly smart investors get blindsided by a fraud. But I’ve learned that it isn’t reasonable to expect them to entirely avoid mistakenly getting taken in by what on the surface seems like a sound investment but turns out to be a fraud. A buying mentality is simply incompatible with the skeptical mentality needed to avoid scams. Continue reading →

http://www.dailyfinance.com/2011/07/19/4-signs-a-company-is-fudging-its-quarterly-earnings-results/

Posted by TEH Jun Wen, Year 3 undergrad at the School of Accountancy, Singapore Management University

(Financial shenanigans cost shareholders billions of dollars. This is part of an ongoing series about how to spot Wall Street wrongdoing before it puts your portfolio in jeopardy. See last week’s “Is There an Enron Sitting In Your Portfolio?” for more.)

For many companies, meeting or beating quarterly earnings estimates matters more than anything else. Add stock options to the mix, or big cash bonuses tied to short-term earnings or stock price targets, and executives’ temptation to focus exclusively on quarterly results becomes irresistible. In the worst cases, this tunnel vision can drive companies to creative accounting, or even fraud. Continue reading →

Role of the Chief Executive Officer in preventing lapses in ethical standard

Posted by Terence Chua, Year 4 undergrad at the School of Business, Singapore Management University

I remember an article I read from Bloomberg, “AIG of Drugmakers Pfizer Is Too Big to Be Guilty” -http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahodmf54hyPA
Brief summary: Pfizer sales personnels blatantly ignore negative health consequences to push drug with detrimental health consequences. Despite being fined repeatedly for such lapses in the past, regulatory authorities have found it difficult to come up with a strong enough punishment to prevent Pfizer from committing such a lapse because the bankruptcy of Pfizer will lead to greater detriments to society; if Pfizer is convicted of crime, they would face debarment from federal programs. And that would mean that Medicaid and Medicare patients would have to either somehow pay pocket for vital medicines the company produces or go without. With such a consideration, Pfizer’s senior executives continue to flout laws without much consideration of the consequences of their actions.

So what does the above article have in reference to accounting fraud? Continue reading →

http://www.ft.com/intl/cms/s/0/8e2165d4-a08a-11e4-9aee-00144feab7de.html#axzz3QB0A4rHe

January 28, 2015 5:14 pm

Democratising finance: China’s P2P industry attracts scammers

Gabriel Wildau in Shanghai

When Chinese peer-to-peer lending platform Hengjin Dai launched last June, it used a three-day promotion to lure investors. Just 12 hours later its website went dark. In a similar case the 22-year-old founder of Boliya, another P2P platform, whom state TV had featured as a model young entrepreneur, suddenly vanished. Police in Chengdu, the capital city of western Sichuan province, told the Financial Times they were investigating the case but declined to provide further details. Local media quoted a company employee saying they owed investors substantial sums.

Even as P2P lending has grown dramatically in China over the past year, and venture investors have flocked in, analysts say that the industry has become a breeding ground for fly-by-night operators who once inhabited the world of informal lending. Continue reading →

http://www.chicagobooth.edu/capideas/spring02/accountingabroad.html

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

Accounting Abroad-How to Keep Managers and Auditors In Line
Reforming Financial Reporting in Developing Nations
Research by Ray Ball
How do you improve the quality of financial reporting in countries switching from a planned to a market economy? Conventional wisdom suggests these countries should simply adopt high-quality accounting standards and high-quality reporting and disclosure will follow. The European Parliament recently took this approach, but it has not worked in other countries. The top priority for reform should be restoring the rights of affected shareholders and lenders to sue managers and auditors for false or misleading reporting.
The Enron scandal has brought unprecedented attention to the U.S. accounting system and the topic of financial reporting and disclosure. While Enron may be news here, in many countries Enron-style accounting is the norm. A reflex response has been for governments and Securities and Exchange Commission-type organizations to tighten their regulation of accounting standards, despite the evidence that regulation decreases financial reporting quality. Continue reading →

http://www.businesstimes.com.sg/companies-markets/guanxi-in-china-can-be-a-double-edged-sword

Guanxi in China ‘can be a double-edged sword’

Cai Haoxiang

29 January 2015

Business Times Singapore

A relationship of trust can paper over fraud, for example, warn due-diligence experts

DOING business in China, it is said, boils down to guanxi, or relationships. But buying a company linked to someone powerful can just as well work against you, warned participants at a symposium, who were discussing issues related to conducting due diligence in China. If the powerful backer of one’s business is caught up in an anti-corruption crackdown, the business would, at best, not grow as quickly as expected; in the worst-case scenario, the company could fold. Alternatively, one’s relationship of trust could lead one to overlook fraud or other undeclared issues. Continue reading →