Accountability Against Financial Fraud

"Pay Up or be Axed"....That's the headline that appeared on the main page of The Star newspaper dated 26th November 2011. Basically, the headline was refering to the Malaysian government recent proposal in mitigating the issue of occupational or management fraud within the public sector. It was further stated that "Officers who cause the government to lose money due to their negligence will be made to repay a portion of the lost revenue and they may even be sacked. If there are cases of embezzlement, ministry and department heads have to take the responsibility to report the matter to the police so that an investigation can be carried out". The Public Service Department (PSD)introduced these measures to ensure that civil servants are held accountable for the losses highlighted by the Auditor General in the 2010 Report. PSD recently issued a set of comprehensive guidelines to all ministries and state authorities on procedures in managing financial fraud at workplaces...

Book Publication on CISM

The Malaysian Institute of Integrity (IIM) is embarking on the publication of a new book titled "Corporate Integrity System Malaysia" (CISM). The Accounting Research Institute, which is represented by its director, Professor Dr Normah Omar has been invited to chair the "Book Publication" meeting held today at IIM. Premised on the New Economic Model (NEM) the CISM solicits feedback from various stakeholders: Professional Bodies, Trade chambers, Academia Experts, Regulatory Authorities, Enforcement Agencies, Multinational Corporations, Government-Linked Companies,
Public Listed Companies, Small Medium Industries, Retailers and Consumer Markets. In soliciting feedback from stakeholders, the Private Sector Group of IIM had organized many Roundtable sessions and seminars. The academia Expert group has successfully produced a "Consultative Document on Corporate Integrity System Assessment Questionnaire" that can be used by corporations to self-assess their corporate integrity system.

New Tools and Research Projects in Financial Fraud investigation

Towards the end of the semester, the students who are currently undertaking the Anti Money Laundering and Financial Criminology course are busy finalising their final research project. The project requires the students to work in group and to choose real financial fraud cases and to simulate the cases with latest analytical techniques in fraud investigation. The simulation project requires them to come up with fresh documentary evidences by conducting face to face interviews with different groups of employees affected by the fraud or to discuss with enforcement agencies and regulators.. Throughout the semester, the students have been exposed to various real-life financial fraud cases. They had to present two prior cases where they had to (i) identify possible weaknesses in the internal control system; (ii) understand the theories underpinning fraudulent behaviours and (iii) learn to use new tools that can be handy and useful in financial fraud investigation. Three guest speakers comprising a police officer, a merchant banker and a deputy public prosecutor were also invited to give talks on financial criminology.

Forensic Accounting and Financial Criminology Association

The Protem Committee and graduates of our Master in Forensic Accounting and Financial Criminology Program met up today to discuss the formation of the Forensic Accounting and Financial Criminology Association and the registration of the association with the Registrar of Societies (ROS). Members of the association will comprise graduates of the program whose number is now reaching two hundred. The Master program was first introduced in July 2006 and the first graduate cohort was produced in August 2008. In addition to normal membership, the association will also admit students and practioners as associate members. Currently, the top three protem committee members comprise President, Mohd Rashid Tan Sri Musa; Haswadi (Deputy President) and Hesri Faizal (Secretary). The formation of the association will path the way towards developing more qualified professionals in the area of forensic accounting and financial criminology. As a HICoE driving a niche research area of Islamic Financial Criminology, the formation of this new association will certainly adds value to the Accounting Research Institute (ARI)and the Faculty of Accountancy, Universiti Teknologi MARA (UiTM). More collaborative works in the area of research, training program and publications will be initiated with the upcoming association.

Discussions on Islamic Microfinancing

The Islamic Accounting and Muamalat research group had a fruitful discussion with one of the guest speakers of the World Universities 1st Zakat Conference which was just recently held in Kuala Lumpur.
The speaker, Dr Malik Al Asmar (in brown suit)from Belgium visited the Accounting Research Institute this morning to discuss on possible international collaboration in zakat research and Islamic microfinancing. Both topics are in line with ARI's 2012 research program in Islamic Accounting and Muamalat. Dr Malik has agreed in principle to participate with ARI for both projects. A phd student from Iran, Mr Syed (in brown shirt)has recently enrolled with ARI to embark on a study related to Islamic Microfinancing.

ARI Exhibition at a "211 Hours Non-Stop Debate"

In an effort to list this activity in the Malaysia Book of Records, the organizers comprising Universiti Teknologi MARA, Utusan Malaysia and Majlis Belia Malaysia (MBM) organize a "211 hours non-stop debate". Themed "Transformation and National Integration", the debate's participants include students from public universities, private universities, community colleges, Teachers colleges, polytechnics and secondary schools in Malaysia. At the end of the event, the organizers expect to produce useful resolutions as proposed by the Generation Y. Yang Berhormat Dato' Saifuddin Abdullah, Deputy Minister of the Ministry of Higher Education graced open to officiate the event today at Universiti Teknologi MARA. In conjunction with the historic eight-day event, the Accounting Research Institute (ARI) participates in the exhibition activity by showcasing ARI's research products and expertise. As a Higher Institutions' Centre of Excellence (HICoE), ARI's expertise cover varied range of accounting-related matters. This include financial criminology, forensic accounting, Islamic accounting & finance, public sector accounting, corporate governance, CSR reporting & sustainability, Financial Reporting, accounting standards, government-link companies research and management accounting. All the best to all. The time clicks on, time to beat... 211 hours

Preparing for PhD Research Proposal

This week, aspiring PhD candidates of the university are attending an intensive research proposal workshop which is organized by the Institute of Leadership and Quality Managemenet (IlQAM). As one of the facilitators for the workshop, Prof Dr Normah Omar, Director of the Accounting Research Institute (ARI) delivered her talk today on a topic "Preparing a PhD Research Proposal". It was stressed in her talk that one of the most important elements of a research prosal is the identification of the right "PROBLEM STATEMENT". It is important in a proposal that the problem stand out so that the reader can easily recognize it. Sometimes, obscure and poorly formulated problems are masked in an extended discussion. In such cases, reviewers and/or committee members will have difficulty recognizing the problem. A problem statement should be presented within a context, and that context should be provided and briefly explained, including a discussion of the conceptual or theoretical framework in which it is embedded. Clearly and succinctly identify and explain the problem within the framework of the theory or line of inquiry that undergirds the study. This is of major importance in nearly all proposals and requires careful attention. It is a key element that associations such as AERA and APA look for in proposals. It is essential in all quantitative research and much qualitative research. State the problem in terms intelligible to someone who is generally sophisticated but who is relatively uninformed in the area of your investigation. Effective problem statements answer the question “Why does this research need to be conducted.” If a researcher is unable to answer this question clearly and succinctly, and without resorting to hyperspeaking (i.e., focusing on problems of macro or global proportions that certainly will not be informed or alleviated by the study), then the statement of the problem will come off as ambiguous and diffuse. Once the problem is clearly identified, pay attention to other important components of a proposal:
1. Title (Working Title)
2. Preamble/Introduction
3. Short Statement of the Problem
4. Research Objectives
5. Research Questions/Hypothesis
6. Review of Research Literature
7. The Design - Methods and Procedures
8. Tentative Time Table
9. References
10.Attachments/Appendixes

NPO Governance & Reporting

The Selangor Registrar of Societies (ROS)is embarking on a pilot project to enhance the
governance and reporting of societies and non profit organisations (NPO) who are currently registered with ROS. The pilot project is initiated jointly by ROS and the Accounting Research Institute (ARI) of Universiti Teknologi MARA. Premised on the requirements of the Societies Act 1966, the Asia Pacific Group on anti Money Laudering (APG Mutual Evaluation 2007) Report and the APG Typologies of NPO (2011), the pilot project develops an assessment instrument and evaluates the governance and financial reporting practices of 100 NPOs. The results of the pilot project will be ready by the end of November 2011. Today, Prof Dr Normah Omar (ARI Director), associate Professor Dr Roshayani Arshad (Head of the project) met up with ROS directors from Selangor (MR Noreffendy) and Kuala Lumpuar (Ms Zuliana) to discuss research progress. Currently ROS Selangor and ROS Kuala Lumpur have respectively more 9,000 and 8,000 societies and NPOs registered under them. Efforts are continuously undertaken by ROS to improve the governance and financial reporting of NPOs in Malaysia.

Financial Fraud Investigation Analysis

Master students from the Anti Money Laundering and Financial Criminology course presented their respective local financial fraud cases and showcased different analytical techniques which include Beniesh M-Score Model, Horizontal & Analytical Analysis, Ratio Analaysia. Fraud Risk Indicator Typology, Risk Management Model, Financial Integrity model, Accounting Anamolies Analysis. Some of the local cases presented include Transmile Berhad, Megan Media Berhad, Nasioncom, Tat Sang Berhad, Jasatera Bhd, Wimems Corporation Bhd, Welli Multi Corporation and Inix Group. One of the groups was presenting two cases of cheque fraud and how the use of the VSC6000 document analyzer machine was able to detect the fraud. The focus of the presentation was to highlight financial fraud investigation framework as well as analysis of the data collected. Most of the companies who were involved with financial reporting-related issues have since either been suspended or delisted from the local bourse.

APMAA Conference 2011 - Day Three

Day three started with three parallel sessions which were grouped under Finance, Audit & Financial Reporting and Management Accounting- Budget & Reward System. A total of nine papers were presented in the early morning sessions. After the morning break, another twelve papers were elaborated and discussed in three sub-groups of "performance evaluation", "Balanced Scorecard" and "intellectual Capital & Information Technology". The final session of the conference was the Plenary Discussions. The Plenary segment was moderated by Professor Akira Nishimura, the founder and first president of the Asia Pacific Management Accounting Association (APMAA). Two speakers namely Prof Paul Scarborough from Brock University, Canada and Prof Kenji Yasukata from Kinki University Japan presented their papers which looked at the role of management accounting information in value creation in international companies. Prior to the closing of the conference, APMAA President Professor Susumo Ueno made his closing speech and remark. In a nutshell APMAA Conference 2011 has achieved its objectives. In the afternoon, private meetings were held by members of the steering committee
and the Asia Pacific Management Accounting Journal APMAJ. Discussions were also made on forging international research collaboration among APMAA member countries and for members to secure international grants for the projects. The Accounting Research Institute (ARI) from Malaysia is initiating a one year research project on "Target Costing Implementation and Practices in Asia Pacific Region". To date, members from several countries have indicated interest to participate: Japan, China, Taiwan, Korea, Singapore, Australia, New Zealand, Canada, UAE, Indonesia and Bangladesh. The group hopes to present their survey findings during the next APMAA Conference. Another collaborative project is a managemenmt accounting book with the proposed title of "Management Accounting Practices in the Asia Pacific Region" which is also targeted to be completed within a year. Professor Roger Willet and Professor Nishimura will be joint editors for this book. Till we meet again next year at the 8th APMAA Conference in Xiamen, China.

APMAA Conference 2011: Day Two

The second day of the conference started with another keynote paper on the theme "Management Accounting: A Value Creation Tool for Sustainability" by Mr Jeremy Nasrulhaq. Jeremy is an Independent, Non-Executive Director of the Malaysia Airport Holding Berhad (MAHB). Being in the industry for the past 29 years, he has held various key positions at international multi national companies. Based on his own experiences, management accounting has always been used strategically by the companies he worked with. When he served Unilever Malaysia as a Commercial Director, he has created a lot of management accounting-related positions so that accountants are not just focussing on preparing reports, but more importantly act as business partners to the organization. Following the keynote address were three Parallel sessions broken into three sub-themes:Management Accounting & Strategic Management Accounting, Governance & auditing and Financial Accounting & management. A total of twenty papers were presented concurrently by participants. After the lunch break, participants were taken to Putrajaya, Malaysia's administrative capital city for a tour. Then in the evening, participants were invited to the 7th APMAA dinner, which was sponsored by DRB HICOM Berhad. Forthcoming hosts of the 8th (Xiamen University, China) and 9th (Nagoya University) APMAA conferences were also invited to give short previews of the event that will be held in 2012 and 2013 respectively.

APMAA Conference 2011 - Day One

The International Conference of the Asia-Pacific Management Accounting Association (APMAA) 2011 started
on a high note with opening speeches by the President Prof Dr Susumo Ueno, Vice President Prof Dr Normah Omar and a keynote address by Datuk Bazlan Osman, CFO of Telekom Malaysia Berhad. Datuk Bazlan's paper titled "Management Accounting - A Value Creation Tool for Sustainability" discusses the various management accounting tools used and implemented by the telecommunication company. At TM Berhad, management accounting tools are used for profit planning, cost management, performance evaluation, developing strategic maps for Strategic Business Units (SBUs)and in deciding the quantum of stakeholders reward. In gauging and cascading the understanding of corporate vision, strategic objectives, actual implementation and business performance, TM Berhad uses the Balanced Scorecard (BSC) tool. After the morning break, the plenary session showcased two speakers: Prof Roger Willett from the University of Tasmania spoke on "Quantitative and Qualitative Methods and Trend in Management Research" and Prof Tae-Sik Ahn from Seoul National University, Korea discussed on "Social Responsibilities of Business School". A Discussion panel discussed a topic on "direction of Management Accounting Research in the Asia Pacific Region" saw five professors critically analyzing research directions in Japan (Prof Ueno from Konan University), Korea (prof Tae Young Paik, from Sungkyunkwan University), Indonesia (Prof Grahita from University of Merdeka, Malang), Thailand (Prof Wila-sini from Chulalongkorn University) and China (Prof Gu Liang Tang from International Business and Economics University).
After the lunch break, the conference continued with a FORUM where four practitioners and one professor participated in the discussion. The session was moderated by Mr Venkkat Ramanan, Head of CIMA Malaysia. he four practitioners were namely Mr Nor Haimee Zakaria from Bank Rakyat Malaysia; Mr Mohd Shukrie from Pos Malaysia Berhad; Mr Peer Mohamad from Bank Muamalat and Mr Terence Soo from Hicom Teck See. Prof Jimmy Tsay represented the academic researcher group. Wow, there's indeed so many things to learn. The day's event ended with a Summit meeting where invited heads of accounting association discussed of ways to move forward in promoting management accounting as a competitive tool. Mr Yeoh from MIA/CIMA presented a snapshot of Malaysia's National Awards for Management Accounting (NAfMA).

Signing Letters of Intent

The Accounting Research Institute (ARI)signed two letters of intent to signify interests of respective parties to forge potential collaboration in the areas of research, post graduate supervision, staff and students exchanges. The two institutions, namely University of Tasmania Australia and University of Merdeka, Malang Indonesia signed the letters of intent at a special segment during the APMAA 2011 conference at the Shah Alam Convention Centre (SACC) today. Once the paper works are ready, a more formal Memorandum of Understanding (MOU) will be signed by the vice chancellors of the universities in the near future. For ARI, the MOU signing will add more impetus to the internationalisation drive for its HICoE status.

PhD Colloquium

In conjunction with the 7th International Conference of the Asia-Pacific Management Accounting Association (APMAA)which is hosted jointly by APMAA and Universiti Teknologi MARA (UiTM), a PhD Colloquium is held today. Professor Dr Paul Scarborough from Brock University, Canada gave an interesting keynote speech which implicates the fact that good publications arise from well thought-off research projects. Hence, phd candidates should plan and strategize their research projects in a manner that would result in publication spin-offs. A total of ten papers were presented by ten PhD candidates comprising those from first to final year students. The Accounting Research Institute (ARI) thanks all discussants who took time to review the papers. All in all, the discussants had given some very good feedback for all the papers presented. In fact, the PhD Colloquium 2011 is APMAA's latest initiative for its annual conference activity. More than fifty PhD students attended the one day colloquium held at the Wawasan Room, Universiti Teknologi MARA's beautiful green campus in Shah Alam. Well done all and thank you

NPO Online Reporting for ROS

The Accounting Research Institute (ARI) and the Registrar of Societies (ROS) have been discussing on a collaborative project in developing an online reporting mechanism for all non-profit organisations and societies who have registered with the ROS.
Today, a group of ARI researchers, headed by Prof Dr Normah Omar made their proposal presentation to ROS Committee. The proposed project is an initiative by ROS and ARI to enpower societies and NPO to submit relevant information through an online mode. The Asia-Pacific Group (APG)on anti-money laundering and anti financing of terrorism in its recent typology report on NPOs has proposed that"Material Information" be made available by NPOs. Such information include (i) Sources of revenue (fees, donations, gifts and fund raising), (ii) Activities of NPOs, (iii) Expenditures and their distribution, (iv) Personnel (members, committee and management),
(v)List and Value of assets and liabilities, (vi) Governance structure and (vii)anti-money laundering and anti financing of terrorism (AML/CFT) policy. ARI's proposed project includes the development of a financial reporting guideline for NPOs, an online financial reporting system, governance structure and training of ROS staff. The pilot version of the system is expected to be ready by early December 2011. An outreach program to explain the proposed system to NPOs in the country will be organized by ROS in due time.

Learning More About AML/CFT

In pursuing research in financial criminology, one must understand the laws governing financial fraud. One such law is Malaysia's Anti Money Laundering and Anti Terrorism Financing Act (AMLATFA 2001)which was introduced in 2001. Today we invited a Deputy Public Prosecutor (DPP) who was handling the AMLA and financial crime cases at the Attorney General Chamber office prior to his recent appoinment with the Malaysian Anti Corruption Commission (MACC). DPP Mohd Saifuddin shared his experiences with the Master of Forensic Accounting and Financial Criminology students on issues and challenges in implementing the Act. In his lecture, the DPP shared a lot of real case studies with the students. In gathering evidences for financial fraud cases, investigators must have the ability to "read in between the lines" and gather as much information from witnesses as they possibly could...

ARI Welcomes Mr Ismail Mahayudin

The Accounting Research Institute (ARI) welcomes Mr Ismail Mahayudin as our newly appointed Senior Research Fellow. His appointment is to train ARI researchers and to facilitate ARI in it's fundamental research in the area of Islamic Accounting and Muamalat. Mr Ismail has wide experience in this topic. He joined Bank Islam Berhad as General Manager of Trade Finance and Treasury Division in 1983. He was promoted to Senior General Manager, Retail Banking in 1994. He was a director of Al-Wakalah Nominees Sdn Berhad and BIMB Institute of Research and Training Sdn Berhad. As a professional trainer, he lectures and trains professionals in Trade Finance and banking Operations. His book titled "International Trade Operations", which was published by the BIMB Institute of Research and Training Sdn Bhd (BIRT) remains a source of reference for the Islamic banking industry.

ICAPMAA 2011

The 7th International Conference of the Asia Pacific Management Accounting Association (ICAPMAA 2011) will be held on 17-19 November 2011 at the Shah Alam Convention Centre (SACC).
Preceeding the conference will be a PhD Colloqium to be held on 16th November 2011 in Universiti Teknologi MARA (UiTM). The Accounting Research Institute (ARI), through its associate research centre, CIMA-UiTM Asian Management Accounting Research Centre and the Faculty of Accountancy will be joint hosts for the event. Ten papers will be presented at the one day PhD colloqium. Meanwhile, forty papers will be presented at the conference. The UiTM organiser is expecting some ninety international participants. ARI thanks conglamorate DRB HICOM for sponsoring the conference dinner. The upcoming ICAPMAA 2011 will be an interesting one. In addition to the normal paper presentations, we have also included other events for ICAPMAA 2011: Business Meeting with various accounting fraternities, Founding members meeting, dinner & cultural show, Signing ceremony of Letter of Intent and a visit to Putrajaya. ICAPMAA is an annual event and past conferences have been hosted by different countries in the Asia-Pacific region. ICAPMAA 2010 was hosted by the National Taiwan University in Taipei and the ICAPMAA 2012 will be hosted by University of Xiamen, China. The Asia-Pacific Management Accounting Association (APMAA) has also decided on forthcoming hosts for future conferences: ICAPMAA 2013 (University of Nagoya, Japan), ICAPMAA 2014 (Seoul National University, Korea), ICAPMAA 2015 (University of Chullalongkorn, Thailand). ARI thanks our conference organizers: Prof Ibrahim Kamal (Conference Chair), Prof Suzana & Associate Prof Dr Wee Shu Hui (Joint chairmen of conference organizing committee) and their team members for putting together a splenlid job. The Elseiver International has also agreed in principle to to index ICAPMAA proceedings into Elsevier PROCEDIA.

Financial Reporting Framework for NPOs

The collaboration between Accounting Research Institute (ARI) and the Registrar of Societies (ROS) will proceed with both parties working on formulating the Memorandum of Understanding (MOU) and Memorandum of Agreement (MOA). ARI teams will comprise three different but integrated groups, working on developing the financial reporting framework for non-profit organisations (NPOs) who are currently registered with ROS.
In developing the framework, ARI teams will examine current profile of NPOs/societies who are regsitered with ROS. Then the development of (i) NPO governance guideline, (ii) financial reporting guideline and (iii) financial reporting system, an online submission system by NPOs/societies. In preparing the framework, ARI undertakes into consideration all comments and recommendations proposed by the Financial Action Task Force (FATF) and the Asia Pacific Group on anti money laundering. Both ROS and ARI hope to launch the online financial reporting regime by the end of December 2011.

Data Analysis Techniques for Fraud Detection

Excerpts from WIKIPEDIA the free Encylopedia:
Techniques used for fraud detection fall into two primary classes: statistical techniques and artificial intelligence (Palshikar 2002).

Examples of statistical data analysis techniques are:
•Data preprocessing techniques for detection, validation, error correction, and filling up of missing or incorrect data.
•Calculation of various statistical parameters such as averages, quantiles, performance metrics, probability distributions, and so on. For example, the averages may include average length of call, average number of calls per month and average delays in bill payment.
•Models and probability distributions of various business activities either in terms of various parameters or probability distributions.
•Computing user profiles.
•Time-series analysis of time-dependent data.
•Clustering and classification to find patterns and associations among groups of data.
•Matching algorithms to detect anomalies in the behavior of transactions or users as compared to previously known models and profiles. Techniques are also needed to eliminate false alarms, estimate risks, and predict future of current transactions or users.


The main Artificial Intelligence techniques used for fraud management include:
•Data mining to classify, cluster, and segment the data and automatically find associations and rules in the data that may signify interesting patterns, including those related to fraud.
•Expert systems to encode expertise for detecting fraud in the form of rules.
•Pattern recognition to detect approximate classes, clusters, or patterns of suspicious behavior either automatically (unsupervised) or to match given inputs.
•Machine learning techniques to automatically identify characteristics of fraud.
•Neural networks that can learn suspicious patterns from samples and used later to detect them.
Other techniques such as link analysis, Bayesian networks, decision theory, land sequence matching are also used for fraud detection (Palshikar 2002).