The Informatics affair 1

Informatics Holdings Ltd is a listed company which is one of the largest education providers in Singapore. One of its subsidiaries is Informatics Groups Singapore Pte Ltd (IGSPL). False accounting issues in relation to IGSPL's 2003 financial statements involved approved in principle revenue (AIP revenue) and international student recruitment revenue (ISRR).

AIP revenue involved student fees from local students. IGSPL has standing arrangements with financial institutions to provide loans to students for to finance their studies. It is not totally clear but it appears that the students only signed up with the school on the basis that their student fees would be paid through loans arranged by the school. The school here recogised revenue from student fees when the student was registered, rather than when approval for the student loans were obtained.

ISRR is revenue from foreign students studying in Singapore. Under Singapore law, each such student can only commence his studies after approval from the government body, Immigration and Checkpoints Authority (ICA). However, IGSPL recognised the revenue from these students even before approval had been obtained fro ICA. This was based on its past experience that

The above 2 accouting procedures adopted by IGSPL contradict the accounting principle that revenue from services should only be recognised when the service has been rendered to the customer.

Bank officer's fraud

Former bank officer, Ms Lynette Ng Pei Ling, was sentenced to 3 months for her offence of forgery in July 2007. As a relationship manager with United Overseas Bank, she had forged a letter purportedly from the bank guaranteeing a customer Mr Lok Kok Seng 10% returns per annum for 4 years. She made full restitution, an important fact in the court sentencing decision.

She later jointed HSBC but in court, said that she had lost her job.

She was supposed to obtain a $1,440 commission from the sale of a $150,000 investment to Mr Lok.

Punishment for fraud

The courts take into account many factors in sentencing including the degree of planning, the amount of money involved and the restitution made (in other words, whether the criminal has repaid the victim for the loss).

One interesting fact is that if you want to steal a million, from the punishment point of view, it is better to take it all at one go rather than take the amount through several actions. In the first case, it is sometimes possible to argue that it was done in a moment of weakness and the court might be slightly lenient. In the second situation, with repeated offences, the court will note that the acts were done with deliberation and if they took place over a periood of time, the sentence may well be on the high side.