Effective Communications & Accounting Systems

Cite this

Executive Summary

Clive Peeters is one of the largest chains of retail stores with 49 stores operating in different regions of Australia including Melbourne, Sydney, Brisbane, Queensland, and regional Victoria. The company came into existence in 1993 with its head office in Melbourne and later expanded in Brisbane in 2001. The company specializes in the retail of electronic products which it acquires from different manufacturers and distributors both locally and internationally. The company went on to gain a listing on the Australian Stock Exchange in 2005. Since then the company has been able to grow significantly through expansion and opening of new stores. The company posted net revenue of $535 million in FY08 and it employs 1,300 individuals. The company came under investigation as news regarding accounting manipulation by the company’s payroll manager surfaced which involved misappropriation of $19.4 million revenues. The alleged manager of the company was involved in the misappropriation of revenues since July 2007 and as a result of this major accounting mishap in the company the profits of the company felt significantly with its stock’s position faltering in the capital markets of Australia. Upon investigation it was revealed that the ex-employee of the company not only used the misappropriated funds for asset purchase throughout Australia but also went on buying a major percentage of ownership of Clive Peeters, becoming the 15th largest stockholder.

This report will provide details of the court case and allegations made by the prosecutor against the ex-employee of the company and make certain important recommendations for CQ University to ensure effective communication and controls over accounting systems.


Since the 2005 public listing of Clive Peeters, it emerged in the Australian corporate sector as one of the fastest-growing retail companies with its network expanding across major regions of Australia. The company has its major business line in the distribution and selling of electrical goods of different brands and manufacturers. The company has successfully been able to offer an impressive range of electrical items with impressive customer service throughout its 49 stores (Clive Peeters 2009). In the year 2009 the revelation of a white-collar crime involving the company’s ex-employee Ms. Sonya Causer who was working with the company in the capacity of the payroll manager send shock waves in the corporate sector and led to a major downward slide in the company’s stock value. In the following paragraphs, details of the crime committed by Ms. Causer are provided and the company’s stance on bringing only civil cases against the ex-employee is discussed.

Case Analysis

The case involving Ms. Causer, an ex-payroll manager, of Clive Peeters is an interesting one that highlights not only the weaknesses in the accounting and reporting framework of some of the major corporations of Australia but also points out an interesting view of the company’s stance on white-collar crimes which are committed by their staff. It has been suggested that the Australian economy which apparently saved itself from the precarious effects of the financial crisis is hit badly by the rise in accounting frauds. One of the major steps taken by companies to cut back their costs of operations was to reduce the size of their workforce thus putting greater responsibilities on fewer individuals (Dillon 2009). In the case of Clive Peeters similar argument could be made against the company’s inability to effectively segregate duties. Ms. Causer who was working for the company as payroll manager was amongst the authorized signatories of the company. She was involved in the misappropriation of revenues since 2007. The alleged admitted that she has been involved in the mishandling of the company’s funds and accumulating them in her private account to make investments in properties across Australia. She has been found to have purchased 43 properties and 3 luxury cars for herself. On further investigation, it was revealed that Ms. Causer had been buying Clive Peeters stocks and she had become the 15th biggest shareholder using the company’s misappropriated funds (Samios 2009).

The existence of properties came as a hope for the company to retrieve much of the lost amount which is estimated to be around $16 million. The company did not file a criminal case against Ms. Causer which came as a surprise to its shareholders. This is arguably done because the company does not want to send wrong signals to the market regarding weaknesses in its internal control mechanism which could have a devastating impact on the company’s market capitalization. The company by avoiding criminal litigation and carrying out a civil case against its ex-employee was able to steer up a positive response from its shareholders in the market (Anonymous 2009). Other factors contributing to the irregularities in trading were the company’s cut down in annualized costs and inventory levels which impacted the company’s business and cash flow position (Avenell 2009).

The company has laid out its corporate governance statement governed by the Board of Directors and covering issues of effective communication and controls over the company’s working. Despite the stricter rules and sol called vigilant the company’s control systems were not able to raise doubts about the misappropriation of revenues which were taking place since 2007. It was only through whistle-blowing by another accountant of the company who came across a discrepancy involving $2 million in the company’s records and went on reporting to the company’s CFO on July 29, 2009, regarding implausible irregularities in company’s ledger (Carson and Battersby, 2009). The company’s CFO Steve Rowarth informed the company’s Managing Director Greg Smith and affidavits were submitted to Victoria Supreme Court. For investigation purpose Ms. Causer volunteered to unravel the accounting manipulation within company’s accounts. In fact she tried to hide facts and later on admitted to “fudging of numbers” (Battersby and McIlwraith 2009). Like any other accounting frauds this case also involve reassessment of the initial estimation of the amount involved in the accounting fraud by the company. From just $2 million the estimations went to $7 million and later to almost $20 million in misappropriations by the company’s payroll manager Ms. Sonya Causer. The company later suspended trading in its stocks and informed the Australian Securities Exchange (Thomson, 2009).

The accounting fraud raised serious concerns regarding internet banking facility which companies use to manage their accounts. Usually corporations have two or more signatories to sign up any cheques or allow bank transfers. However in the case of internet banking only one individual is required to authorize the transaction. This was the case in Clive Peeters where Ms. Causer took out funds from company’s accounts without any approvals. She joined the company in 2005 and she was amongst two employees who were authorized to carry out online transactions. This pointed out inherent limitations in company’s internal controls which were superseded by the senior manager of the company. The company’s audit, business risk and compliance committee oversee the risk management of the company’s operations and none of them were able to point out the misappropriation of revenues by one employee of the company. Furthermore, it did not come as a surprise that the accounting fraud which was taking place in the company’s higher rank was not uncovered by the external auditors (Romney and Steinbart 2009). In fact weaknesses in both internal and external audit planning, evidence collection and communication results could be suggested as computer audit suggests complete failure as it was not able to trace the discrepancies in company’s both ledgers. The SOX 2002 which has also been integrated in Australian accounting laws requires assessment of internal controls by company’s audit committee and also by external auditors but in the case of Clive Peeters they have not been able to audit company’s ledger store on the backup server which clearly indicated discrepancies in companies physical ledgers resulted from foul play of Ms. Causer. The company’s annual report provide details of internal controls and auditors’ assessment of them but it is also clear that the misappropriation of funds remained undetected which was more than the company’s profit last year (Clive Peeters 2009) This reflected severe weaknesses in COBIT framework of the company which oversights the information system and the company did not have proper ways of reconciliation of accounts and company’s both internal and external auditors failed to give their opinion on effectiveness and efficiency of the system and even availability and comparability of data store on it.

Furthermore, assessment of the company’s COSO framework suggests certain weaknesses in risk management which is underlined as being effective in the company’s report to identify any material aspects affecting financial reporting. The reliability, completeness and availability of information were all comprised which was also overlooked by the company’s internal audit team for so long. Too much reliance on a couple of individuals to process financial transactions is a major drawback. The ethical values of employees are comprised by higher independence and fewer controls which allowed Ms. Causer to act solely to take funds of the company which was struggling with declining cash flows over the last year and it had to undertake certain actions which resulted in 200 jobs being cut off and slow down in company’s sales. All this was in fact set up by one employee who had been granted excessive power to exercise.


The above facts about the accounting fraud case at Clive Peeters Limited suggest the importance of internal controls in any organization. Suggestively in the wake of accounting fraud where companies have undergone several structural changes and to cut down their operational costs the internal audit teams and even external auditors need to be more vigilant regarding possible accounting manipulations and accounting frauds. In the case of Clive Peeters, there are obvious weaknesses in the reporting. Too much concentration of responsibilities allowed the company’s ex-accountant to take funds out of the company’s accounts without any noticing and later elucidating figures for reconciliation in the company’s ledgers. The case also identified major weaknesses in both internal and external audits which seemed to have relied on a presentation by the company’s accountant and did not undertake substantial tests to reconcile the company’s ledgers and bank accounts. The company which was suffering from declining cash flows and lower profitability undertook restructuring measures but failed to carry out an investigation into its accounts and related manipulation.


Based on the above report on Clive Peeters Ltd case of accounting fraud the following paragraphs are laid down to put forward recommendations for CQ University to ensure that such fraud does not occur CQ University.

The university should have strong internal controls to prevent fraud for incurring at all levels of information system. The university has devised a Fraud Prevention Policy however it is recommended that the elements of this policy are tested out by carrying regular substantial testing of information sharing and processes involved in the system.

Furthermore, to ensure that ethical values that are considered foremost important for prevention and detection of frauds are communicated to and adhered by all individuals hired by the university. For this purpose it is recommended that regular interviews are held of individuals to judge their understanding and behavior towards their responsibilities. Also it is necessary that the university ensures that the individuals it hires for its accounting functions are in fact offered positions on the basis of highly scrutinized process. Segregation of duties at all levels of accounting information system is definitely required where not one individual is given extra ordinary responsibilities to allow him / her to exercise undue power.

Authorization of transactions through university online receipt and payment systems should be properly designated with red tags built in the system to point out any discrepancies which are taking place in the systems maintained by the university. This way the accounting function of the university could achieve operational efficiency where only those transactions which are authorized by the management are posted in and out of the company’s accounts. If possible then online banking should be avoided as it has been criticized on numerous occasions during case proceedings of Clive Peeters that companies often ignore the possibilities of accounting fraud by those who are responsible for carrying out transactions via online banking. This suggests that the university should identify threats to the accounting information system and plan out its audit activities in such a way to manage problems in advance (Romney and Steinbart 2009).

Another recommendation for the university could be that the accounting and auditing staff is provided sufficient training on a regular basis so that they are updated with the requirements of laws and regulations applicable in Australia and also internationally. By carrying out such activities the university can ascertain the loop holes and irregularities within its system by empowering individuals with knowledge and understanding. The university should also emphasize on whistle blowing so that workers can keep an eye of each others’ behavior and report any irregularities which they observe. The introduction of SOX which later became integral part of Australian accounting laws have laid out guidelines for protecting the identity and interests of individuals who report such wrongdoing.

The coordination between audit committees, internal auditors and external auditors should be streamlined and well documented. Verbal explanations should be avoided which could be misleading or misinterpreted. The communication within organization and that is carried out externally should be recorded and investigated if any foul play is being carried out by employees of the company.

The overall recommendations set forward here for CQ University will surely help the university to make its accounting and auditing functions stronger. The management of the university needs to take proactive role in the developing not only preventive controls but also defensive controls and corrective controls in case if some accounting manipulation is suspected and discovered.

List of References

Anonymous, 2009. Clive Peeters eases back towards normalcy. [Online] (The Age Company Limited) Web.

Avenell, P., 2009. Clive Peeters outlines 7 reasons for trading irregularities. Web.

Battersby, L. & McIlwraith, I., 2009. How Clive Peeters lost then found its $20m. Web.

Carson, V. & Battersby, L., 2009. Employee admits stealing $20m. [Online] Web.

Clive Peeters, 2009. Annual Report 2009. Financial. Melbourne: Clive Peeters Limited.

Clive Peeters, 2009. Company Overview. [Online] Web.

Dillon, J., 2009. Small frauds a sign of a sickie mentality. [Online] (The Daily Telegraph) Web.

Romney, M.B. & Steinbart, P.J., 2009. Accounting information systems. New York: Prentice Hall.

Samios, N., 2009. Temptation will always be with us. [Online] Web.

Thomson, J., 2009. Retailer Clive Peeters suspends shares over “accounting discrepancies”. Web.

Cite this paper

Select style


BusinessEssay. (2022, February 11). Effective Communications & Accounting Systems. Retrieved from https://business-essay.com/effective-communications-and-amp-accounting-systems/


BusinessEssay. (2022, February 11). Effective Communications & Accounting Systems. https://business-essay.com/effective-communications-and-amp-accounting-systems/

Work Cited

"Effective Communications & Accounting Systems." BusinessEssay, 11 Feb. 2022, business-essay.com/effective-communications-and-amp-accounting-systems/.


BusinessEssay. (2022) 'Effective Communications & Accounting Systems'. 11 February.


BusinessEssay. 2022. "Effective Communications & Accounting Systems." February 11, 2022. https://business-essay.com/effective-communications-and-amp-accounting-systems/.

1. BusinessEssay. "Effective Communications & Accounting Systems." February 11, 2022. https://business-essay.com/effective-communications-and-amp-accounting-systems/.


BusinessEssay. "Effective Communications & Accounting Systems." February 11, 2022. https://business-essay.com/effective-communications-and-amp-accounting-systems/.