FRAUD REPORT

BY
This report contains an analysis of the Frozen Foods fraud
and Curtain University fraud.

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EXECUTIVE SUMMARY
This report contains an investigation, analysis and recommendations regarding the Frozen
Foods fraud from The Courier Mail and the Curtain University fraud from The Australian.
This report highlights the importance of strong internal controls and focuses on an
investigation and comparison of the two cases, the different types of fraud and finally the
measures to prevent occupational fraud occurring.

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TABLE OF CONTENTS

Executive summary........................................................................................................... 1
Table of contents............................................................................................................... 2
Introduction:...................................................................................................................... 3
Methods of Fraud:.............................................................................................................. 3
Types of fraud:

..3
Culture of controls:............................................................................................................ 4
Conclusion:........................................................................................................................ 5
Recommendations:............................................................................................................ 5
Reference list..................................................................................................................... 6
Appendix........................................................................................................................... 7

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INTRODUCTION:
The purpose of this report is to communicate an analysis and investigation of the Frozen
Foods and Curtain University fraud and to recommend strategies to improve each business
controls over assets. Analysis of these frauds will focus on the comparison of both frauds,
types of fraud committed and culture of controls. This report highlights the ineffective
culture of controls and thus the business susceptibility to occupational fraud.

METHODS OF FRAUD:
One fundamental factor that is responsible for occupational fraud is opportunity, in which
an employee has the opportunity to misappropriate an asset due to a lack of internal
controls or overriding management. Niperess, defrauded approximately $700,000 from a
Frozen Foods company in Queensland. As a consequence of poor internal controls, Niperess
defrauded the business from 1999 to 2004. Likewise to Niperess, Tania Carter, the business
manager at Curtain University in Perth defrauded the university of approximately
$650,000. The distinct similarity between these cases is amount of money these women
were able to defraud. In regards to the differences between the two cases, the Curtain
University fraud was committed through collusion, whereas Niperess worked solo. Carter
colluded with her ex-husband, Mathew Carter, and another accomplice to defraud the
University from 2007 and 2010. In regards to the types of firms defrauded, a major
difference is that Niperess defrauded a medium sized business, of which is in direct
contrast to Carter who defrauded a large University. Another distinct difference between
the two cases is that Niperess was stealing cash from receipts and Carter was paying
money out through the university through false invoices. Niperess skimmed money from
cheques received and was caught after workers found discrepancies in the computer
system. Niperess also committed theft, whereas, Carter syphoned money into a shell
company. In both cases an audit would not have caught the perpetrator as the role of an
audit is not to detect fraud. In addition, the Frozen foods fraud has one significant
difference in contrast against the Curtain University fraud, the business was not insured
against theft by an employee and consequently faced the prospect of insolvency and thus
the loss of jobs for employees.

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TYPE OF FRAUD:
Fraud or intentional deception is defined as a strategy to achieve a personal or
organization goal to satisfy a human need (Singleton, Lindquist, & Bologna, 2006, p. 55).
As indicative from the fraud tree (Wells, J, 2001)(Refer to figure 1), Niperess committed
fraud through skimming and lapping money from the business as well as larceny from cash
on hand. There are variances to skimming sales. Not the entire sale has to be skimmed,
especially if the system is too cultured to override the controls completely (ACFE, 2015).
This is evident as Niperess only skimmed partial amounts from sales and eventually the
discrepancies caught up with her. The Cressey Fraud triangle is a model for breaking down
the factors which cause someone to commit occupational fraud. There are three
fundamental factors which together lead to fraudulent behavior (ACFE, 2015). The Cressey
fraud triangle (Nodon, 2008) (refer to figure 2) indicates that Niperess had a motivation to
steal the money, of which she claimed was a gambling addiction. The Cressey fraud
triangle also indicates that her opportunity was the lack on internal controls within the
business and her position dealing with the business sales. Finally, the rationalization for
the fraud was a physiological dependence that got out of control, (The Australian, 2012).
In contrast to Niperess, Carter colluded with two accomplices outside the business.
Collusive fraud is extremely difficult to detect within the business because risk specialists
and auditors often fail to consider collusions in fraud risk assessments (Hulwyer, 2011).
The rationale for Carters fraud was a mental illness that included a borderline personality
disorder (The Australian, 2012). In addition Carter piled up fictitious expenses on her
corporate card. This indicates that Carter was living beyond her means which is a
behavioral red flag for fraud (Lowers Risk Group, 2013) (Refer to figure 3).

CULTURE OF CONTROLS:
Due to distinct differences in the methods of fraud, both cases too have distinct differences
in regards to controls breached. A strong sense of internal controls is an important aspect
as it will create an environment or culture within an establishment (CPA Australia, 2008). A
strong culture of controls is crucial, this is evident from the Frozen Foods fraud, as fraud
occurred due to a lack of internal controls thus the culture of controls. This is contrasted
against The Curtain University fraud as there was a strong enough culture of controls that
Carter had to override management. The overall difference between the cases in terms of
controls breached is that the Frozen Foods fraud had poor controls implemented within the

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business and thus enabled Niperess to commit fraud over 5 years. This is in direct contrast
to Carter who had the opportunity by overriding management through collusion for 4
years. Due to the poor lack of internal controls in the Frozen Foods fraud, there was no
supervision to ensure larceny or fraud could not occur, whereas for the Curtain University
there was no way to stop an override of controls.

CONCLUSION:
Overall, there are distinct similarities and differences between each fraud case in which
enabled both women to commit fraud. As evident from the two cases, the risk of
occupational fraud can be minimized there is a strong culture of controls, however it is
impossible to stop management being overridden. To conclude from the cases, there are
dire consequences once occupational fraud occurs within an establishment, consequently
the establishments most likely will never regain the money defrauded and thus struggle to
function properly again.

RECOMMENDATIONS:
-

Businesses should establish a stronger culture of controls.

financial processes.
Cash collected and payments should be confirmed by another employee.

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REFERENCE LIST
ACFE. (2015). Skimming Sales Receipts Cash Frauds. Retrieved from
http://brisbaneacfe.org/
ACFE. (2015). The fraud triangle. Retrieved from http:///www.acfe.com
CPA Australia (2008). Internal Controls Within A Small Business [PDF]. Retrieved
from http://www.cpaaustralia.com.au/
Edminstone, L. (2005). Employee Blew Stolen $700,000 on Pokies. Retrieved
from http:// http://www.couriermail.com.au/
Hulwyer, H. (2011). Collusive fraud schemes and controls. Retrieved from
http://mydailyexecutive.blogspot.com.au/
Lowers Risk Group (2013). Red Flag Behaviors of Occupational Fraud
Perpetrators. Retrieved from http://www.lowersriskgroup.com
Nodon. (2008). The fraud triangle. Retrieved from http://www.nodon.ch/
Singleton, A.,Lindquist, R. Bologna, G. (2006). Fraud auditing and forensic
accounting. (3rd ed.). New Jersey: John Wiley & Sons.
The Australian (2012). WA uni manager gets 4 years for fraud. Retrieved
from http://www.theaustralian.com.au
Wells, J. (2001). Enemies Within. Retrieved from http://www.journalofaccountancy.com/

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APPENDIX

Figure 1: The Fraud Tree

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Figure 2: Cressey Fraud Triangle

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Figure 3: Behavioral Red Flags

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