Central Luzon State University

College of Business Administration and Accountancy

ASSIGNMENT
IN
COMPUTER ACCOUNTING INFORMATION
SYSTEMS
Accounting Frauds
(National and International)

Submitted by:

Submitted to:

March 7, 2018
Philippine Accounting Frauds:
Metropolitan Bank
 A senior executive has been arrested for defrauding the Philippines' second-largest bank
in a scandal that sent the institution's shares tumbling Friday, officials said. Metropolitan Bank
and Trust Co vice president Maria Victoria Lopez is suspected of stealing 1.75 billion pesos
($34.5 million) in loans from his employer, they added. A trusted employee of the bank for 30
years, earning a monthly salary of 250,000 pesos, Lopez was arrested Tuesday while trying to
move the stolen money to an unspecified personal account, National Bureau of Investigation
spokesman Ferdinand Lavin told a press conference. Lavin said the money was taken from the
credit facility of one of its biggest corporate clients. The bank did not confirm how much was
stolen or the time-frame of the fraud, but stressed it did not affect its customers.

"In the context of the bank's 1.9 trillion-peso financial resources, rest assured that we
continue to operate business as usual for the bank and our customers," it added. Metrobank, as
the bank is known, is investigating whether there were other people involved in the fraud, Lavin
added. Universal Robina Corp, a large food processing company, said Friday the fraudulent
loans had been drawn from its credit facility with Metrobank. "We thank Metrobank President
Fabian Dee for giving us heads up advice on this unfortunate development and his assurance that
URC will not be financially impacted in any way by this incident," it said in a statement.
However, the fraud wiped nearly $300 million off the paper value of Metrobank on Friday as
investors sold down the stock. Metrobank shares closed 5.03 percent. But Central Bank governor
Nestor Espenilla told reporters he had no doubt Metrobank would be able to absorb the blow.
"Banks have controls so that these kinds of things can be mitigated and withstood," Espenilla
said. However, he added: "We have to look into the adequacy of those controls if in fact a
significant crime happened." Last month, a computer virus forced the Bank of the Philippine
Islands to shut down online access to its services and cash machines for two consecutive days.
The bug drained some accounts and added money to others. Last year unidentified hackers stole
$81 million from a US account of the Bangladesh central bank, funnelling the stolen funds into a
Philippine bank and Manila-based casinos.

PIPC Ponzi Scheme

 PIPC. Just as the FrancSwiss scam was on the wane, another scam replaced the
financial sector involving a Singaporean and hundreds of wealthy Filipino investors. PIPC was a
high-yielding investment program that ran from March to July 2007. It was classified as an
internet ponzi scheme and promised investors 4.5% interest daily for their minimum investments
of USD1,000., which could be encash through Internet-to-bank transactions.

When the scheme was busted during an entrapment operation by the NBI, it was
discovered that FrancSwiss deceived investors to the tune of P1 billion. Among the victims were
politicians, showbiz personalities, OFWs, generals and retirees. A popular showbiz couple
invested in Francswiss but did not disclose the total amount invested. A former PBA star also
admitted to having invested USD3,000 in FrancSwiss. When the scam was busted, Singaporean
owner Michael H.K. Liew, has already fled the country and disappeared, supposedly taking with
him between US$140 million and US$250 million of investors’ funds.

ZTE-NBN Network Bribery Case

Amount: $197 million

Year: 2008

The above number stands for how much the contract with the Chinese government was
overpriced. Naturally, the money was intended to go to the criminals’ pockets. ZTE stands for
Zhongxing Telecommunication Equipment Co., a Chinese government-backed corporation, and
it was supposed to develop a nationwide broadband network (NBN). The whole deal’s worth was
$329.4 million. In short, something went wrong with the plan and suspicions arose when the
contract mysteriously vanished into thin air just one day after it was signed.

INTERNATIONAL ACCOUNTING FRAUDS

 TOSHIBA ACCOUNTING SCANDAL

TOKYO, Japan – Toshiba said Thursday, February 4, it has expanded its full-year loss
forecast to an eye-watering $6.0 billion, as one of Japan's best-known firms accounts for an
embarrassing profit-padding scandal.

Toshiba – a vast conglomerate that makes everything from rice cookers to nuclear plants
– also pointed to a global economic slowdown, saying it was taking a big bite out of results
across the company, including memory chip and computer sales.

Its new loss forecast of 710 billion yen ($6.0 billion) for the fiscal year to March – well
up from an earlier 550 billion yen ($4.6 billion) net loss – came as Toshiba said it lost 479.4
billion yen in the 9 months to December, reversing a profit from a year earlier.

The disappointing figures come after Toshiba announced last month it was inflating a
damages claim against a group of former executives by a whopping tenfold in the wake of its
accounting scandal. The company said it was now seeking around $27 million from 5 former top
managers including 3 presidents for their role in the fraud. Japan's market watchdog last month
slapped the firm with a record $60 million fine over the affair, which saw the company inflate
profits by about $1.2 billion since the 2008 global financial crisis.

A company-hired panel found top executives had pressured underlings systematically to

inflate profit figures to hide poor results. Toshiba's business was dented by the global downturn,
while the 2011 Fukushima disaster killed off demand for atomic power at home in a big blow to
the firm's key nuclear division. The scandal ushered in a wide-ranging restructuring, which
included thousands of job cuts. The company has about 200,000 employees globally. The
company pledged to press on with the overhaul. It Tokyo-listed shares closed up 2.90% at 198.5
yen before Toshiba announced its earnings report, bucking a downturn in the broader market.
The accounting scandal was one of the most damaging to hit Japan in recent years. The case
forced an incumbent president and 7 other top executives to resign last year and hammered the
company's share price. Toshiba is facing lawsuits from investors, while Moody's and Standard &
Poor's downgraded its credit rating to junk after the scandal.

WorldCom Scandal (2002)

 WorldCom was an American telecommunications company based out of Ashburn,
Virginia. In 2002, just a year after the Enron scandal, it was discovered that WorldCom had
inflated its assets by almost $11 billion, making it by far one of the largest accounting scandals
ever.

The company had underreported line costs by capitalizing instead of expensing them and
had inflated its revenues by making false entries. The scandal first came to light when the
company’s internal audit department found almost $3.8 billion in fraudulent accounts. The
company’s CEO, Bernie Ebbers, was sentenced to 25 years in prison for fraud, conspiracy, and
filing false documents. The scandal resulted in over 30,000 job cuts and over $180 billion in
losses by investors.

Turing Pharmceuticals and Martin Shkreli

Martin Shkreli became known as the bad boy of the drug industry after his drug
company, Turing, increased the price of a 62-year-old drug that treated HIV patients by 5,000%
to $750 a pill. But it’s what he did before that could land him in jail.

In mid-December, the government arrested Shkreli on charges of stock fraud related to

his activities while at Retrophin, the drug company he ran before Turing. The former hedge fund
manager is accused of using shares of Retrophin to pay off investors who had lost money with a
hedge fund he ran in the past. The government described Shkreli’s alleged behavior as similar to
a ponzi scheme. Shkreli, who maintains he is innocent, says there is little evidence of fraud
because his investors didn’t lose money. Shkreli, who has been defiant on Twitter about the
allegations against him, bought the sole copy of a Wu-Tang Clan album for $2 million. He has
had called himself the most successful Albanian. Mother Teresa, also an Albanian, presumably
would not be proud.