November 28, 2022

Donalds Hobby

World Finance Reviews

AIM says country manager’s over-reliance on finance manager led to perpetuation of fraudulent activities

KUALA LUMPUR (June 7): Business process outsourcing solutions provider Advance Information Marketing Bhd (AIM) has said its Indonesian unit country manager’s over-reliance on her finance manager had allowed the perpetuation of fraudulent activities.

“The finance manager’s wide management portfolio which encompasses both key finance and business administration allowed the act of fraud more difficult to be detected despite the emergence of red flags which prevented top management from addressing any shortcomings.

“Lack of suitable protocols for highlighting irregularities further exacerbated the situation,” AIM said in a bourse filing.

The filing was issued to highlight additional information obtained via a new report issued by BDO Governance Advisory Sdn Bhd, the independent forensic auditor appointed to carry out a detailed investigation into the Indonesian unit, PT CLS System (PTCLS).

Last December, AIM said employee fraud and control deficiencies had been found at Jakarta-based PTCLS, with subsequent findings of an internal audit further confirming the employee fraud.

In a Bursa query reply at the time, AIM said four staff confirmed to have been involved had been terminated while two other staff were still under investigation.

“The employees’ fraud was caused by falsification of customers’ purchase orders, violating the conflict of interest provision in the employee handbook by establishing an entity to supply vouchers to PTCLS, embezzlement by way of understanding and poaching PTCLS’ customers.

“The finance manager who was in charge of approving new suppliers, purchasing vouchers and issuing vouchers from stores was also under investigation,” it said.

Subsequently, AIM announced on Jan 28 that BDO had completed its first phase of forensic audit report, finding the four fraudsters having clearly breached the company’s policy on conflict of interest, and anti-corruption, collusion and nepotism.

BDO also found that the breakdown in the internal control system and the possible conspiracy among the fraudsters and other employees within PTCLS had caused the failure to detect the fraud and contributed to the fraudulent act.

AIM added it had decided to continue engaging BDO to conduct the second phase of comprehensive investigative review.

On June 1, AIM said BDO had completed the second phase of comprehensive forensic audit.

AIM further noted that the root causes or factors contributing to the conduct of fraudulent activity and would take the necessary remedial actions as recommended by BDO to tighten the current controls in PTCLS.

In addition, AIM said it would improve the reporting and monitoring mechanism within PTCLS as well as between PTCLS and AIM and consult legal advice on the next course of action to be taken against the implicated staff.

AIM shares’ last adjusted closing price was 10 sen, valuing the group at RM26.61 million.

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Advance Information Marketing says employee fraud found at its Indonesian unit