Canadian Accountant Caught Buying Nearly $7 Million Worth of iPhones and iPads With Company Credit Card

[jlc1978]

That card must've had one hell of a high credit limit. Even though the devices were purchased over a period of two and a half years, 7M worth of purchases is staggering.

Probably. When I had a corporate AmEx there was essentially no limit. AmEx knew it would get paid by my employer, and I didn't have to worry about having enough credit to pay plane tickets, hotels, etc. All expenses had to be approved by a manager and a senior manager as well.

 

[coolfactor]

I agree with this statement though with a twist... If this company was private at the time of the fraud, they may not necessarily be a requirement by the government to be audited, so there is a failure point there.

This is more so an issue of a lack of internal controls, as she is the accounting manager that oversees everyone’s credit cards, she should not have been allowed to oversee her own. Her charges should have been reviewed by the CEO, CFO, Controller, or some supervisor above her.

Exactly. The company is equally at fault for having a flawed setup of purchase approval. Many employees feel entitled to get as much as they can from their employer. They feel like they are "owed", even when they sit there doing nothing for hours.

 

[Amazing Iceman]

I would have expected from anyone in that company but the Accountant. C'mon, what was she thinking!?
Numbers don't lie!

 

[Mousse]

I would have expected from anyone in that company but the Accountant. C'mon, what was she thinking!?

Wait wut?! You don't expect you accountant to embezzle? That's the one they you SHOULD expect out of your accountant. This is why you hire outside auditors at the end of the fiscal year to look over your books. No matter how you slice it, this is a form of embezzling.

When they interviewed me for the job, they asked a simple question, "What does 2 + 2 equal?" I got up, closed the door, check the area for any listening devices. When I was certain no outsiders were listening, I answered, "What do you want it to be?"

Numbers don't lie!

Now I know you're not an accountant or you're a very honest (ie low tier) accountant.

 

[hinesmj]

If this company was properly/thoroughly audited (Especially with a credit card), Nadia would’ve have been caught much earlier on to stop her antics. A lot of companies are audited once, if not twice a year with any external expenses with company credit cards.

This a common misconception about audits and isn't necessarily true. An audit is not designed to detect fraud. Auditors do not look at every transaction. They use a concept called materiality to determine what they do our don't look at as well as assessing internal controls. If this amount was under their materiality threshold, they may have never seen it. If she was doing this since 2011, then you can estimate that she was misappropriating about $875k per year. For a large company (as I'm assuming this is, since it was looking to go public), in a tech industry, purchases like this may not raise a red flag. The onus here is on the company's finance department for allowing this person to approve their own expenditures, as that's a blatant violation of segregation of duties and likely would have prevented this, unless there was collusion with another employee.

Moral of the story? An audit would not necessarily have detected this as audits are not designed to detect fraud. They are designed to determine whether financial statements are materially accurate according to generally accepted accounting principles.

Source: am CPA/auditor.
[doublepost=1554491963][/doublepost]

At $7M (and probably climbing), how did she think this was going to stay unnoticed?

Greed is always the downfall of these types. If they keep it small, they can cover their tracks. The greedier you get, the harder it is to cover. Just look at Enron.
[doublepost=1554492157][/doublepost]

Lack of effective internal controls.

Exactly! Segregation of duties, people!!!

 

[theonekcrow]

This a common misconception about audits and isn't necessarily true. An audit is not designed to detect fraud. Auditors do not look at every transaction. They use a concept called materiality to determine what they do our don't look at as well as assessing internal controls. If this amount was under their materiality threshold, they may have never seen it. If she was doing this since 2011, then you can estimate that she was misappropriating about $875k per year. For a large company (as I'm assuming this is, since it was looking to go public), in a tech industry, purchases like this may not raise a red flag. The onus here is on the company's finance department for allowing this person to approve their own expenditures, as that's a blatant violation of segregation of duties and likely would have prevented this, unless there was collusion with another employee.

Moral of the story? An audit would not necessarily have detected this as audits are not designed to detect fraud. They are designed to determine whether financial statements are materially accurate according to generally accepted accounting principles.

Source: am CPA/auditor.
[doublepost=1554491963][/doublepost]

Greed is always the downfall of these types. If they keep it small, they can cover their tracks. The greedier you get, the harder it is to cover. Just look at Enron.
[doublepost=1554492157][/doublepost]

Exactly! Segregation of duties, people!!!

As an accounting student that just finished an accounting ethics course, I highly applause your post!!!

 

[44267547]

An audit is not designed to detect fraud.

I don’t agree with this at all, nor is it entirely accurate. I do see your point about how audits sole focus is _not_ to detect fraud, but it’s nearly impossible for fraud not to be detected from a thorough auditor/audit, that’s the caveat. I worked in corporate loss prevention for years on these types of cases for external misappropriation of funds/credit cards, business accounts, etc. my specific duties were to locate/extract any type of suspicious activity that didn’t correlate with the company’s expenses. Now, the difference being, I worked closely with auditors who initially may find a discrepancy with some type of fraud, and then pass it off to us for the initial investigation. My point being, auditors may not initially be looking for fraud, but in most cases, they detect it even if it’s not their first intention. It’s the same difference, but different job responsibilities.

 

[Eriamjh1138@DAN]

$7 million? Child’s Play! How about $122 million?

https://ascienceenthusiast.com/a-man-sent-facebook-and-google-122m-in-phony-bills-they-paid-them/

 

[BigMcGuire]

Probably. When I had a corporate AmEx there was essentially no limit. AmEx knew it would get paid by my employer, and I didn't have to worry about having enough credit to pay plane tickets, hotels, etc. All expenses had to be approved by a manager and a senior manager as well.

My company amex card has a $3600 limit. I wonder if it is set by my company? And yeah, every charge has to be approved by a manager and senior manager. If it isn't, I get the company accountants asking me about it really quickly. I guess some companies are tighter on their corporate cards .

 

[danielsutton]

The National Post has shared the story of a Canadian accountant who was caught after buying nearly $7 million worth of iPhones and iPads with her company credit card and reselling them to the owner of a small electronics store.

Ian Gavan/Getty Images​

Nadia Minetto, who was as an accounting manager at Mississauga-based software company Wescom Solutions, started buying thousands of Apple products with her company-issued American Express card in 2011. It had been her job to approve business expenses for all employees, so her spending went unnoticed.

Over the next two and a half years, the Ontario Superior Court found that Minetto sold 5,321 iPads and 4,942 iPhones to businessman Gabriel Fung, who in turn sold them at his store Plus One Solutions in the Toronto area and to wholesalers in Hong Kong, turning a profit of just over $1 million.

Fung first met Minetto after responding to her ad for an iPad on Kijiji, a popular Craigslist-like classifieds site in Canada. Their transactions eventually became more elaborate, often involving 10 to 20 devices at a time, ultimately leading to bulk shipments to the address of a virtual business set up by Fung.

The scheme came to an end in July 2014, when consultant Kristine Pacy discovered spending irregularities as Wescom was contemplating becoming a publicly traded company. The court determined that at least $6,831,834 of Wescom's money was misappropriated dating back to May 2009.

Minetto admitted to her actions and, in October 2014, she consented to a judgment in the amount of $6,831,834.17 plus interest. Wescom also won a judgment for more than $5 million against Fung, but he was awarded his cross claim for the same amount against Minetto, potentially reducing his amount owed.

This week, an Ontario appeals court dismissed Fung's appeal over his judgment.

Article Link: Canadian Accountant Caught Buying Nearly $7 Million Worth of iPhones and iPads With Company Credit Card

Considering that a apple products are so expensive, this accountant could have bought exactly ONE iPhone XS Max for $7 million, lol

 

[JBGoode]

I like this one:

https://www.theverge.com/2019/4/4/1...oregon-replacement-counterfeit-chinese-phones

 

[0947347]

Girls like shopping

 

[hinesmj]

I don’t agree with this at all, nor is it entirely accurate. I do see your point about how audits sole focus is _not_ to detect fraud, but it’s nearly impossible for fraud not to be detected from a thorough auditor/audit, that’s the caveat. I worked in corporate loss prevention for years on these types of cases for external misappropriation of funds/credit cards, business accounts, etc. my specific duties were to locate/extract any type of suspicious activity that didn’t correlate with the company’s expenses. Now, the difference being, I worked closely with auditors who initially may find a discrepancy with some type of fraud, and then pass it off to us for the initial investigation. My point being, auditors may not initially be looking for fraud, but in most cases, they detect it even if it’s not their first intention. It’s the same difference, but different job responsibilities.

If you're looking at it from the perspective of your experience, then I can understand why you think that. However, you originally stated that an audit would have detected this, and that's simply not true, regardless of whether you want to agree or not. Sure, it's possible that it COULD have, but to say it definitely WOULD have is wrong. It's as simple as that for the reasons I laid out in my original post. Again, I'm a CPA. I worked in public accounting for years doing audits. Every audit opinion issued specifically states that it is not designed to detect fraud. In fact, I attached an image below I just went and grabbed from Apple's auditor's opinion from their most recent annual report, which says the very same thing:

So, you can disagree all you want, but according to U.S. Generally Accepting Auditing Standards, audits will not necessarily detect fraud. What's throwing you is the fact that in your job, you were specifically looking for fraud. Financial statement auditors are not doing that. You said "in most cases, they detect it..." That's just not true.
[doublepost=1554496871][/doublepost]

I don’t agree with this at all, nor is it entirely accurate. I do see your point about how audits sole focus is _not_ to detect fraud, but it’s nearly impossible for fraud not to be detected from a thorough auditor/audit, that’s the caveat. I worked in corporate loss prevention for years on these types of cases for external misappropriation of funds/credit cards, business accounts, etc. my specific duties were to locate/extract any type of suspicious activity that didn’t correlate with the company’s expenses. Now, the difference being, I worked closely with auditors who initially may find a discrepancy with some type of fraud, and then pass it off to us for the initial investigation. My point being, auditors may not initially be looking for fraud, but in most cases, they detect it even if it’s not their first intention. It’s the same difference, but different job responsibilities.

Here's another note from a simple google search I did: "the vast majority of fraud is not — though may be — discovered by these external auditors."

https://www.claconnect.com/resource...tors-responsible-for-detecting-internal-fraud

 

[44267547]

If you're looking at it from the perspective of your experience, then I can understand why you think that

Except, it has nothing to do with what I ‘think’, is everything with what I know from experience. I know for a fact that an audit would’ve detected this _specific_ type of fraud without question, regardless of an auditors intentions or not. My perspective is exactly that, a perspective with experience that works alongside auditors in loss prevention. Your interpretation of how things may correlate with each company audit are two things are not mutually exclusive and frankly, are inaccurate. Case in point.

However, you originally stated that an audit would have detected this

That’s correct. That’s exactly what would’ve happened with a thorough audit _and_ fraud of this magnitude. There’s no way of something like this that would be completely undiscovered. Period.

 

[genovelle]

People don't see the bigger picture when they're doing stuff like this. It begins with one or two purchases a month. Then a few a week. Then you really think you can get away with it and becomes the norm. "Oh, time to boost this month's paycheck."

You get overconfident. Purchase in bulk, lose perspective, and get sloppy.

Before you know it, you've racked up 7 million dollars.

Of course this judgment doesn’t include jail time, but fail to pay a traffic ticket.

 

[LogicalApex]

The article doesn't say explicitly that it was an Amex charge card. It says it was a 'company credit card' and then later refers to it as simply an 'Amex card'. Are Amex credit cards not available in Canada? Here in the U.S., we have both Amex charge cards and Amex credit cards -- the former having no limit and the latter having a limit.

Business Cards are from Amex are usually charge cards. Otherwise the credit limit would be impacted by the employee credit situation.

 

[theonekcrow]

I don’t agree entirely with this. I do see your point about how audits sole focus is _not_ to detect fraud, but it’s nearly impossible for fraud not to be detected from a thorough auditor/audit, that’s the caveat. I worked in corporate loss prevention for years on these types of cases for external misappropriation of funds/credit cards, business accounts, etc. my specific duties were to locate/extract any type of suspicious activity that didn’t correlate with the company’s expenses. Now, the difference being, I worked closely with auditors who initially may find a discrepancy with some type of fraud, and then pass it off to us for the initial investigation. My point being, auditors may not initially be looking for fraud, but in most cases, they detect it even if it’s not their first intention. It’s the same difference, but different job responsibilities.

If you're looking at it from the perspective of your experience, then I can understand why you think that. However, you originally stated that an audit would have detected this, and that's simply not true, regardless of whether you want to agree or not. Sure, it's possible that it COULD have, but to say it definitely WOULD have is wrong. It's as simple as that for the reasons I laid out in my original post. Again, I'm a CPA. I worked in public accounting for years doing audits. Every audit opinion issued specifically states that it is not designed to detect fraud. In fact, I attached an image below I just went and grabbed from Apple's auditor's opinion from their most recent annual report, which says the very same thing:


View attachment 830524

So, you can disagree all you want, but according to U.S. Generally Accepting Auditing Standards, audits will not necessarily detect fraud. What's throwing you is the fact that in your job, you were specifically looking for fraud. Financial statement auditors are not doing that. You said "in most cases, they detect it..." That's just not true.
[doublepost=1554496871][/doublepost]

Here's another note from a simple google search I did: "the vast majority of fraud is not — though may be — discovered by these external auditors."

https://www.claconnect.com/resource...tors-responsible-for-detecting-internal-fraud

Reasonably, I believe that the closest that an auditor would have came to detecting this fraud was discovering the failure in internal controls on her approval of ALL credit card holders, including herself. However, I theorize that lack of an audit or an uncomprehensive audit allowed this internal control failure to persist for many years.

 

[jlc1978]

When they interviewed me for the job, they asked a simple question, "What does 2 + 2 equal?" I got up, closed the door, check the area for any listening devices. When I was certain no outsiders were listening, I answered, "What do you want it to be?"

The difference between an accountant and an engineer: They're both good with numbers but the accountant lacks the charisma to be an engineer.

 

[hinesmj]

Except, it has nothing to do with what I ‘think’, is everything with what I know from experience....There’s no way of something like this that would be completely undiscovered. Period.

Writing period at the end of a statement doesn’t make it true. Hey, I get it. No one likes to be wrong. Just be happy you learned something today.

 

[Neepman]

7 million? What the problem? Geez thats only like 70 iPhones and iPad Pros.

 

[mikethemartian]

I would think that any professional company would have their records audited by an outside CPA at least annually.

 

[Altis]

To be fair, with Apple's prices in Canada, that's probably only like 7-8 iPads.

 

[mikethemartian]

This a common misconception about audits and isn't necessarily true. An audit is not designed to detect fraud. Auditors do not look at every transaction. They use a concept called materiality to determine what they do our don't look at as well as assessing internal controls. If this amount was under their materiality threshold, they may have never seen it. If she was doing this since 2011, then you can estimate that she was misappropriating about $875k per year. For a large company (as I'm assuming this is, since it was looking to go public), in a tech industry, purchases like this may not raise a red flag. The onus here is on the company's finance department for allowing this person to approve their own expenditures, as that's a blatant violation of segregation of duties and likely would have prevented this, unless there was collusion with another employee.

Moral of the story? An audit would not necessarily have detected this as audits are not designed to detect fraud. They are designed to determine whether financial statements are materially accurate according to generally accepted accounting principles.

Source: am CPA/auditor.
[doublepost=1554491963][/doublepost]

Greed is always the downfall of these types. If they keep it small, they can cover their tracks. The greedier you get, the harder it is to cover. Just look at Enron.
[doublepost=1554492157][/doublepost]

Exactly! Segregation of duties, people!!!

When I worked as a bank examiner for the FDIC one of the methods recommended to avoid fraud was to use dual control since the likelihood of two employees conspiring together was much less than a single person committing fraud.

 

[patent10021]

Well, at least she said sorry.

 

[Amazing Iceman]

Wait wut?! You don't expect you accountant to embezzle? That's the one they you SHOULD expect out of your accountant. This is why you hire outside auditors at the end of the fiscal year to look over your books. No matter how you slice it, this is a form of embezzling.

When they interviewed me for the job, they asked a simple question, "What does 2 + 2 equal?" I got up, closed the door, check the area for any listening devices. When I was certain no outsiders were listening, I answered, "What do you want it to be?"



Now I know you're not an accountant or you're a very honest (ie low tier) accountant.

You are correct.
But I know not to put my full trust on the accountant based on what happened many years ago to someone very close to me.

I’m not an accountant, but I provide support for Quickbooks for some of my clients, and I’m able to detect when something is not right in a report.
What I meant to say earlier is that numbers don’t lie. A report could be altered, but sooner or later the flaw will become evident.
An accountant should know that.
Even in a large corporation, it will all come to light as it did in the case mentioned in this article.