1. Welli Multi Corporation Berhad
PREPARE TO:
DR. ZALEHA BTE OTHMAN
PREPARE BY:
CHUA YI MEI
LIM WAN YI
TAN ZHI JIUN
NUR SAKINAH BINTI MUSTAFA

2. Principle Activity Formerly known as Fourseason (Malaysia) Berhad
Investment holding company engaged in the provision of management services to various subsidiaries involved in the production and distribution of a wide range of products.

3. The Fraud Perpetrators
Managing Director
Executive Director
Deemed to have committed the offences under Section 122B (a) (bb)
read together with Section 122(1) of the Securities Industry Act 1983

4. The switching of external auditor and the service period
Extension for issuing
Financial Statements
Changes in Boardroom
The switching of external
auditor and the service
period
Symptoms of Fraud
Unusual Behavior
Internal Control Weaknesses
Accounting Anomalies
Changes in the Board including:
CEO
Audit committee
Company secretary
Sudden resignation of the CEO
Mr. Tan Chin Han
Dr. Abdul Rashid Tang Abdullah
Account receivable: RM4, 973,707
Inventory: RM19, 940,243
(no physical observation)
Unable to obtain
sufficient appropriate
evidence
Overstated the revenue
Abuse of capacity by
the top management

5. Forensic Accountant Should Involved
Roles
Provide litigation support to courts
Provide evidence in forms of written, oral & calculation
Good communication & investigation mentality
Understand psychology & skepticism
Accurately identify, collect and present findings
Able to identify substance over form
Communicate & present in layman form
Familiar with accounting, auditing, IT & legal concepts
Unbiased opinion
Give trial evidence
Accurate evidence
Study body language
Skeptic against unusual behaviors, anomalies
Questioning skills
“Think like a crook to catch a crook”

6. E
The Crooked

7. Who is Brian Cruver ?
An ex-employee at Enron, he was been hired by Enron 9 months before it was collapsed.
Author of the book “Anatomy Of Greed : Unshredded Truth from an Enron Insider”
The story shows us how a typical Enron employee viewed the company’s dramatic collapse.

8. Red Flags / Symptoms of Fraud

9. Tips and Complaint Bickers , analyst in New York Wall Street
Tried to get Brian to pay attention to Enron’s Financial situation since Brian worked in Enron, especially on the limited partnership and related party transaction
But Brian ignored his advices.
Sharon Watkins, Enron vice president of corporate development.
Alerted Enron CEO Kenneth Lay of irregularities of accounting practices such as booking income based on own developed stock, related parties transactions and others
However, she was not reporting the fraud to related authorities.

10. Extravagant lifestyle
Cruver, bought new car, expensive wedding plan, branded watch and television
Changed in personalities, he become obsessed.
Aggressive compensation driven culture, contributed to dysfunctional corporate culture, obsessed with short-term earning to maximize bonus.

11. Analytical anomalies
Risk and Assessment Control(RAC) responsible for approving deals and managing Enron’s overall risk
RAC’s independence assessment of deal’s value not match with the real value of the deal.
Business unit not come up with real value, they inflated real deal value to meet their target bonus.
The manager in bankruptcy department changed Cruver valuation on deal, no action taken against him.
Peer Review Committee (PRC) created unethical culture in Enron.

12. Accounting anomalies
Highly profitable company, report increased in revenue every quarter.
Stock price keep rising
How can Enron keep increasing in their profit if compared to other companies in same industries.
Using aggressive accounting practice?
Former CEO Jeffrey Skilling refuse to explain unusual accounting practice in Enron
Unable to produce the balance sheet with the earning statement
Something hidden behind it?

13. Unusual Behavior
Sudden resignation of CEO Jeffrey Skilling with inappropriate reason
Holding CEO position for 6 months, worked in Enron since year 1990
Unable to believe that someone who was working so long to head up this company left after so short a tenure.
Mr.Blue, worked in Enron since 80s, being transferred to another project on the other side of the world.
Broke Enron culture, no bad news .
He involved in a report to the management showing the pipeline problem a year before the explosion.

14. The roles of Arthur Anderson
Use as a symbol to show Enron follow the code of ethic, even they owned huge amount of virtual assets
Using the name of Arthur Anderson , to prove their integrity
There are confusing their employee and also the public.
In reality, there are reckless and negligence
Being place in special room, playing golf, games, reading newspaper, they do nothing.
After announcement of resignation of Jeffrey Skilling , Arthur Anderson audit team still sitting and playing games, no investigation carry out, they seems to be very relaxed.
Integrity? Independence?

15. BIGGER THAN ENRON
"Bigger Than Enron" examines three specific cases in which Andersen auditors allowed misleading or fraudulent accounting practices to cause enormous investor losses at Sunbeam, Waste Management, and finally Enron.
Specifically, what failure was bigger than Enron? Answer????
Their auditors. !!!!!
Soon after the fall of Enron was the collapse of accounting firm Arthur Andersen. The 89-year-old accounting firm was once known as the gold standard of integrity in auditing.

16. Pressure from management
SYMPTOMS OF FRAUD
Tips/
Complaints
Unusual Behavior
Accounting Anomalies
No whistle blower
Fear , threat
Pressure from management
A culture of gamesmanship
Try to show good performance
Executives behavior
Stock manipulation

17. accounting firm is both auditing and consulting for a client.
OTHER FACTORS
No segregation of duty
Revolving Door
Congressional Intervention That Blocked Efforts At Protecting Investors
accounting firm is both auditing and consulting for a client.
tendency for auditors take jobs with companies they audit
Congress weakened the protections and tied the hands of regulators, making it easier for aggressive companies like Enron to push the envelope

18. Thank You