Accounting Fraud

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On a Wednesday, which was 19th of May, 2010, it was recorded that Clive Peeters who was an Australian retailer in kitchens, electrical, computers, and white goods sales, stopped trading after the company brought in Mc GrathNicol as voluntary administrators to try and sell off the business.
Accounting fraud:
Souya Causer was a former accountant at Clive Peeters and stole more than $19 million between July 2007 and July 2009. She used her position in the company to steal the fund into eight different bank accounts in order to purchase 44 real estate properties, several motor vehicles, jewelry, and shares. She made 90 withdrawals, 125 payments to eight bank accounts, stealing a total of $19,365,768.

Sonya used the company’s online bank account to withdraw cash through alteration of the payee’s genuine account numbers to accounts that she controlled. She manipulated the general ledger through the creation of “normal” payroll transaction journal entries. In order to cover her fraudulent activities, Sonya used Clive Peeters’ PAYG Clearing Account whose purpose was recording withholding tax remitted from employees’ wages and other employee related payments. She perpetrated the fraud for a year by debiting the PAYG Clearing Account and crediting the bank account. When the accumulated debit amount in the PAYG Clearing Account become too large for concealment, she credited the PAYG Clearing Account and debited the Trade Creditors Control Account.

Sonya was able to avoid detection because employees only examined the “flat text file” for details of transactions instead of examining the sub-ledgers. Therefore, employees did not detect the significant discrepancy between the sub-ledger and the general ledger.

The accounting subsystems that were affected included the sub-ledgers such as the PAYG Clearing Account and Trade Creditors Control Account.

Clive Peeters lacked adequate internal controls. The internal controls that were compromised included segregation of duties, poor system of authorization and independent checks. The absence of these controls gave Sonya an opportunity to commit fraud undetected for two years.

Sonya Causer, spent the equivalent of a year’s company earnings secretly compiling an impressive portfolio, including nine properties in Melbourne’s inner east, 28 in the outer eastern suburbs, and two in Mildura.

Prosecutor Peter Kidd said that Sonya Causer (accountant) used her access to the company’s payroll and superannuation accounts to steal the money


In the Court….

When the theft was discovered during the audit, Causer initially lied about the fraud but later made full admissions. Justice John Forrest said a victim impact statement by Clive Peeters’ general manager Gregory Smith claimed the theft was the primary cause of the company’s collapse. He said that the Cash Flow statements of the Company were significantly compromised by her actions. However, Judge Forrest accepted other factors also hit the company. He ruled Causer’s actions contributed to, but did not cause, Clive Peeters’ ultimate demise.

Court decision:

The Judge said the theft was one of the largest of its type in the state’s history and had been a calculated and sophisticated plan carried out over a lengthy period. Justice Forrest noted in the judgement that Causer could have received a sentence of ten years and six months prison had it not been for her guilty plea, cooperation with police, clean record and restitution. The mother of two has assisted the authorities in recovering some $16.326 million of the $19 million stolen during the two-year spending spree. She will serve a minimum of five years in jail before being eligible for parole. The Judge also took note of the impact of Causer’s actions on her family – which has now sold its family home and left Causer’s husband to care for two autistic children.


Sonya Causer’s case is the great example of making sure that employees had their background checked and make sure the notes they are giving to company are legit. It’s good example of internal control crisis.

Further, the company should have implemented internal controls such as segregation of duties especially in the accounting function to prevent a single person having unfettered access. Segregation of duties ensures that there are several people dealing with specialized tasks such as credit control, banking, payroll, handling petty cash and other roles. A comprehensive system authorization would ensure that an employee does not make unauthorized transactions. In addition, independent checks would deter employees from attempting fraud since they may be caught at any time. Independent checks also aid in the identification of weaknesses and vulnerabilities in the accounting system; hence, adequate measures are implemented to prevent them.


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