Investigators Interim Report
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!!!!! Interim Report into Mr C Emery, Ex CFO
The enquiries into the conduct of the CFO have arisen subsequent to the CEO establishing that the CFO has misrepresented the company financial position over a period of time, since his employment commenced. Furthermore, that the CFO had used a personal credit card to make payments on behalf of the company and claimed those payments back as expenses.
CFO Established facts
• The CFO commenced work with !!!!!! from Monday 27 February 2017 • From July 2017 CFO submitted Profit and Loss accounts which were misrepresenting the company financial status • On 8 Mar 2017 the CFO began submitting expense claims to the business through an ANZ Frequent Flyer Black Credit Card, Account number ****-****-****-1951 with a credit limit of $50,000. • A second card had also been used to submit business expenses, Qantas Premier Platinum Credit card, account ****-****-****-5341, with a credit limit of $18,500.00 • From March 2017 to December 2018 a total of $433,718,32 of expenses were submitted and paid by !!!!!! to the CFO • The CFO did not produce the credit card account statements to the finance staff • The CFO completed a claim form on a regular basis, sometimes three times a month • The claim forms were handed to the accounts staff usually under a number of other documents • CPA qualification documentation from 2016 was claimed through !!!!!! even though the CFO did not commence until 2017 with the company • CIPA Courses from 2016 were claimed through !!!!!! in 2017 • CPA qualification for 2017 and 2018 were also claimed through !!!!!! • CIPA qualifications from 2016 to 2018 inclusive were also claimed through !!!!!! • Reference text books and financial courses were claimed through !!!!!! over 2017 and 2018 • Mobile telephones and ancillaries were claimed having been paid on the CFO’s card • Computer products and ancillaries were claimed having been purchased on the CFO’s card • The CFO had a secondary business which, CJC Partnership Pty Ltd which commenced in 2011 • The CFO’s business undertook a name change on 13 November 2018 to CJC Consulting
Credit Card Review The credit card expense claims by Craig Emery were presented to the investigating officer for review along with the receipts and invoices that were available for the purchases which were shown on the expenses claim sheets. A high level report of that review is as follows:
• Substantial business expense payments were made using the CFO’s personal credit cards • There were a substantial number of expense claims that did not have any supporting documentary evidence • There were a substantial number of claims made for items which appear to be for personal use but not attributable to expenses allowed by the business for its employees without at least written or verbal permission of the CEO. These being training and continuous professional development related to the CPA qualification • There are substantial claims which may be related to the private business of the CFO but charged to !!!!!! , i.e. tax and financial manuals, computer equipment and mobile telephone and ancillary expenses • There were expenses which need to be reviewed by the CEO and management team to scrutinise whether or not they were actual company expenses.
The result of the review was that approximately $102,391.77 of expenditure on the CFO’s cards need to be scrutinised by the CEO and possibly the auditors to ascertain whether or not the expenses are in fact in accordance with !!!!!! business expenses.
There are a number of possible criminal offences which may have been 2committed by the CFO, firstly that of False Accounting, where Profit and Loss statements have been produced to company officers which have not reflected the true financial position of the company. False Accounting is defined below:
CRIMES ACT 1958 – SECT 83
False accounting
S. 83(1) amended by Nos 9576 s. 11(1), 49/1991 s. 119(1) (Sch. 2 item 33), 48/1997 s. 60(1)(Sch. 1 item 60).
(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another—
(2) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
(b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular— he is guilty of an indictable offence and liable to level 5 imprisonment (10 years maximum).
(2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.
The credit card claims made by the CFO would tend to suggest that offences of Theft or Obtaining Property by Deception may have been committed, however these require further investigation if the CEO should decide that course of action. This would be best conducted by the Victoria Police to ensure all evidence is gathered in a way which would ensure conviction at court. The offences of Theft and Obtaining Property by Deception are defined below:
CRIMES ACT 1958 - SECT 72
Basic definition of theft (1) A person steals if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it.
(2) A person who steals is guilty of theft; and "thief" shall be construed accordingly.
S. 73 substituted by No. 8425 s. 2(1)(b).
Obtaining Property By Deception
Obtaining property by deception is charged where a person dishonestly engages in a deception and as a result obtains ownership or control of property belonging to another person. Examples of this include theft of money from an employer by way of deceptive conduct, such as illegitimate refunds; or use of a stolen credit card to purchase items or withdraw funds from an ATM.
This offence is governed by section 81 of the Crimes Act 1958 (‘the Act’).
Obtaining property by deception
S. 81(1) amended by Nos 9576 s. 11(1), 49/1991 s. 119(1) (Sch. 2 item 40), 48/1997 s. 60(1)(Sch. 1 item 59).
(1) A person who by any deception dishonestly obtains property belonging to another, with the intention of permanently depriving the other of it, is guilty of an indictable offence and liable to level 5 imprisonment (10 years maximum).
(2) For purposes of this section a person is to be treated as obtaining property if he obtains ownership, possession or control of it, and "obtain" includes obtaining for another or enabling another to obtain or to retain.
(3) Subsections (12) and (13) of section 73 shall apply for purposes of this section, with the necessary adaptation of the reference to appropriating, as it applies for purposes of section 72.
S. 81(4) substituted by No. 36/1988 s. 6.
(4) For the purposes of this section, "deception"— (a) means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person; and
(b) includes an act or thing done or omitted to be done with the intention of causing—
(i) a computer system; or
(ii) a machine that is designed to operate by means of payment or identification— to make a response that the person doing or omitting to do the act or thing is not authorised to cause the computer system or machine to make.
S. 82 amended by No. 7876 s. 2(3), substituted by Nos 8280 s. 10, 8425 s. 2(1)(b).
The Corporations Act 2001 applies legislation which is incumbent on company officers and employees to act in the best interest of the company the definition being as follows:
– SECTION 184 OF THE CORPORATIONS ACT 2001 A person who is a director or employee of a company intentionally or recklessly acts dishonestly, and fails to act in the best interests of the company or to fulfil their duties. It is also an offence to use your position or access to information dishonestly to gain a benefit for yourself or someone else, or cause a loss to the company.
Good faith--directors and other officers (1) A director or other officer of a corporation commits an offence if they: (a) are reckless; or (b) are intentionally dishonest; and fail to exercise their powers and discharge their duties: (c) in good faith in the best interests of the corporation; or (d) for a proper purpose.
Use of position--directors, other officers and employees (2) A director, other officer or employee of a corporation commits an offence if they use their position dishonestly: (a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or (b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
Use of information--directors, other officers and employees (3) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation commits an offence if they use the information dishonestly: (a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or (b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
Further Investigation It is recommended that the following steps are taken by the CEO to secure evidence that may be available in regard to the CFO’s expense claims against the company:
• the personal laptop of the CFO should be imaged and any evidence of the conduct of the CFO thereon secured • the accounts payable and receivable staff should be interviewed to assess the practices of the CFO when making expense claims • the use of petrol and associated vehicle expenses should be reviewed • the CEO and management team should review the credit card expenditure to ascertain whether or not there is expenditure which is not authorised and would not have been had they known of it
It is the decision of the CEO as to whether or not the findings of this initial investigation be reported to Victoria Police or a criminal solicitor for consideration of further action.
If ????? Group Australia were to conduct further enquiries on the CEO’s behalf, they would reflect the list above. The imaging of the computer could be done either in Australia remotely or in Singapore either of which is achievable, the Singapore option would be quicker and more secure on ????? Group Asia Pacific standalone equipment. The initial retrieval would take a day and the investigation of the hard drive about three days.
The interviews of the staff would take about a day, including preparation but we would secure information as to the conduct of the CFO. The petrol claims could be easily reviewed from the existing systems.
Research with the team as to the validity of the expenses would be likely to take a day. The final report would be easier to compile having completed this interim report.
An estimated cost for the further investigation would be as follows:
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This interim report has been provided at the request of the CEO and it is not a summary of admissible evidence or an allegation of offences committed by the CFO by ????? Group Australia.
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