Auditors, like many professionals, owe a duty of confidentiality to their clients. This means that if an auditor discovers fraud, it is strongly arguable that he should take his clients' instructions on whether or not to report the fraud. In many cases, the directors of a client company might prefer not to report the fraud as it may reflect badly on their management, in addition to damaging the company's reputation.
However, for public companies or their subsidiaries, auditors are required to report serious fraud to the Minister of Finance. Under section 207(9A) of the Companies Act, serious fraud is defined as an offfence involving fraud or dishonesty where the maximum penalty is at least 2 years jail and the value of the property involved at worth at least $20,000.
An interesting point about the provision is that the auditor is only required to report fraud against the company by its officers or employees. However, if he discovers that the company is committing fraud against someone else, the provision does not seem to apply(the relevant words of the provision being "is being or has been committed against the company by officers or employees of the company").
Showing posts with label accountant. Show all posts
Showing posts with label accountant. Show all posts
Sunday, October 4, 2009
Thursday, July 16, 2009
Accountant jailed for embezzlement
Accountant Lim Seow Kok was jailed for 5 1/2 years for embezzlement of over $500,000. He admitted to 74 counts of forgery and criminal breach of trust.
He worked at 11 different organisations (including charities such as Hougang Care Centre) between 2007 and 2009. His method was to join the company for a while, forge cheques to withdraw his employer's monies and then to disappear.
It is unclear whether or not any employer could have stopped him before he took their money. Human Resources departments should, before hiring someone, check his employment history. If the person claims to have had no employment, perhaps a check of his CPF statements will confirm this. To preserve the employee's privacy, the non-essential parts of the statement can be covered up before the statement is shown to the company.
Organisations should also take good care of their cheque books. Although it could be argued that forged cheques are invalid and the banks should bear the loss, avoiding the costs and uncertainty of legal disputes is far preferable.
He worked at 11 different organisations (including charities such as Hougang Care Centre) between 2007 and 2009. His method was to join the company for a while, forge cheques to withdraw his employer's monies and then to disappear.
It is unclear whether or not any employer could have stopped him before he took their money. Human Resources departments should, before hiring someone, check his employment history. If the person claims to have had no employment, perhaps a check of his CPF statements will confirm this. To preserve the employee's privacy, the non-essential parts of the statement can be covered up before the statement is shown to the company.
Organisations should also take good care of their cheque books. Although it could be argued that forged cheques are invalid and the banks should bear the loss, avoiding the costs and uncertainty of legal disputes is far preferable.
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