ACCS, now known as mDR Ltd, was a leader in the After-Market Services (AMS) segment for mobile phones. ACCS positioned itself as a one-stop service provider, offering comprehensive and integrated AMS to customers which included manufacturers, distributors, network operators and end-users in the mobile communication and high-tech consumer products sectors.
The accounting scam at ACCS which involved the Chief Executive Officer, Chief Financial Officer and other Executives included:
- Round tripping
– Falsification of delivery orders and invoices to support the existence of sham refurbishment businesses in its subsidiaries
- Fraudulent claims submitted to Nokia Pte Ltd for refurbishment/repair work on mobile phones that were actually not carried out
Weak internal controls
Fraud –creation of fictitious transactions, falsification of documents and manipulation of accounting entries
Weak corporate governance – The Board of Directors could have been swayed by the CEO, a charismatic figure who was also the founder of the company
Considerations by Auditors:
~ Professional Competence and Due Care? For example, could the auditors have adopted a greater degree of professional skepticism and be more alive to the possibility of fraud?
~ Objectivity applied by auditors in evaluating evidence? For example, could the auditors have performed further work to verify the authenticity of the transactions and accounting documents?