7-Eleven was fined $192,780 for forging employee and payroll records. Payroll and bookkeeping were the most common contraventions across all companies.
This April, the Federal Circuit Court penalised Avinash Pratap Singh, a manager and shareholder of 7-Eleven in Brisbane of $32,130; moreover, a $160,650 penalty was imposed on S & A Enterprises (QLD) Pty Ltd., of which he is a director.
An investigation by the Fair Work Ombudsman (FWO) revealed repeated violations by both companies, namely short-changing and accounting falsification.
Judge Salvatore Vasta revealed that the intended operations “created records that appeared to show that the employees were paid at the rates of pay prescribed by the modern award, including penalty rates and overtime rates of pay, which actually bore no relation to their hours of work or actual hourly rates.”
These malfeasances add yet more examples of companies underestimating the diligence of official investigators such as those at the FWO. Proper oversight of complex audit and accounting procedures is a demanding task, but a necessary one for every organisation.
Penalties for inaccurate bookkeeping have recently become stiffer as official institutions are determined to send a warning to all companies on this issue. Australia now takes fraud more seriously than ever, and businesses need to take extra care to produce accounting reports that are thorough and accurate.
Companies that report their financial details accurately can avoid painful long-term consequences for non-compliance. Over the past few years, FWO has probed company accountability in businesses throughout every sector of the economy. A number of employers have found themselves in court following the discovery of infringements.
Kjoo Pty Ltd., a sushi outlet in New South Wales, was copped for conducting an illegal internship program by the Federal Circuit Court. The company received a $200,000 penalty for underpayment of interns in 2014-2015. Three young foreign workers revealed that they were underpaid a total of $51,025. Judge Philip Dowdy disclosed that there existed a “deliberate, intentional and informed decision by Kjoo, through Mr. Kwon, to underpay the employees to gain a financial advantage for its business.”
Meanwhile, Fuji Xerox sued senior Australia and New Zealand executives for their role in an accounting scandal. There was evidence of “inappropriate” accounting practices for the company’s revenue and net profit position under their administration.
In 2016, Wesfarmers also took legal action against a former Target managing director and some financial staff. Those who were involved in inflating commercial income by $21 million faced allegations of impropriety. The litigation may have contributed to the resignation of the managing director.
As organisations such as 7-Eleven and Fuji Xerox have learned, it’s always best for businesses to have a clear and clean approach to accounting. It is worth stressing that simple negligence can also create negative outcomes for businesses, and that diligence in all matters of accounting is essential. Transparency in the audit process prevents fraud, corruption, waste and abuse – but it is also key for maintaining a stable business that does not get fined or have managers that are forced to resign.
As a general rule, risk can be minimised through the use of efficient systems, internal verification procedures and effective internal communication. These qualities of good corporate governance also lead to the embrace of accountability by every department within your business.Back to News And Media articles