Auston International Group’s former chief financial officer, Chua Peck Wee, 32, was sentenced yesterday to seven months in jail – for playing a part in the falsification of the company’s accounts four years ago. The charge carries a penalty of a fine and/or a maximum seven-year jail term.
Auston is a listed company in the education business.
What was the accounting falsification done?
The former CFO admitted to instructing its accounts staff to record a payment of $268,525 as ‘academic cooperation fees’ to the Upper Iowa University for FY2003.
This amount was actually a payment made by Auston to the University of Wollongong for university fees for FY2002.
What is the impact?
By falsely recording the amount as academic cooperation fees instead of university fees, Auston could capitalise it as a development cost and subsequently amortise the amount over three to five years from FY2003.
Essentially, Auston had avoided recognising $268,525 as expenses for FY2002. It increased the net profit for Auston’s IPO prospectus in 2003.
The ex-CEO said the ex-CFO had came up with the wonderful idea of smoothening out the expense. The ex-CFO said he was too weak to stand up against the ex-CEO’s demands.
Whatever the circumstances preceding the crime, you Mr ex-CFO had helped to pass the necessary entries. So you got to pay for it!
Reference – Jan 12, 2007, “Ex-Auston CFO gets seven months’ jail”, Business Times, Michelle Quah.