Criminology

REQUIRED PART A
INITIATION
Pacific Development Society has requested for AUD6,000,000 loan facility. The available information about the Development Society is not enough to extend or deny the loan it has requested. However, it is the procedure that the assigned agencies make an enquiry so as to make an informed decision. This report conducts an investigation and provides the researchinvestigation findings it further provides the recommendations based on the findings.

PURPOSE
Aim and Objective of the investigation
 To gather more information about the Pacific Development Society, the information obtained will assist in making an informed decision upon loan application by the society. The Society had applied for AUD 5,000,000 loan. The investigation should be informative enough and analyze the following areas

Financial strength
The Competency of the Management
Efficiency of the Internal Control
The General Public Perception about the Company and
The Level of Technology that the Society Embraces
To demonstrate the strength, the investigation should figure out at least three major projects that the Society has assisted. There is need to evaluate the continuity of this project.

Business
Establish the real owners of the society
The directors of the society should be identified and interviewed on different issues. Their level of participation in the day to day running of the society should be evaluated. The high management staff should be well vetted and their education level as well as experience well recorded on the kind of business they are engaged in

In case the society has sources of income, the sources should be well analyzed and should give the expected level of income generated by them. If there are any taxation details that the client has, there can be of great assistance in finding more information about him. These documents, with the help of the lawyer can be obtained from government archives

The suppliers of the client are also of great importance to the credit worthiness of the client, the general reasoning should reflect on his capability to pay the creditors accordingly and in time, the same can happen in case the facility is extended to him.

The employees should also be an area of target they can give more information about the society. This is an area that should be handled with a lot of wisdom as they are likely to give their opinion that may not be true at all instances.

The business coverage
The market share that the society command should be well analyzed this can be retrieved from the companies minute books.

The perception of the people
The loyalty of the customers should also be commented on even if it is very difficult to precisely know this and it is dynamic, but at least a general view should be derived.

The loans with other banks
The client operation with other banks in the country or foreign banks should be analyzed. The investigation should look into the bank statements of all the banks. The statement should cover the general operation statement, any foreign account statement, loan accounts and the information when the accounts were opened. The lawyer should be of assistance in this area.

Industry Players
Indentify all the business partners
Alongside the general management of the business there are other third parties that deal with the society. Who are the donors of the society Who are the business partners of the company, if the business is in operation, then who are the previous financers All of them should be analyzed. Indentify the third parties who deal with the company for instance the methods of asset valuation
Identify the valuation method used

The accounting system that is operated in the business should be evaluated. The accountant should give an opinion whether the business comply with the required accounting standards, if not, the focus should be directed towards unearthing the reason why it is so.

Information can be sourced from the land lord of the client
He should be aware of the existence of the business in his premises, the way that they settle the rent should be a factor to consider. On the other hand the amount of rent paid can assist in analyzing the expense burden of the company.

The other businesses in the same building
They can give a general assistance of the business. They can give information on the day to day functioning of the business

Get information from creditors, debtors and customers if any identified.
 Management Plan and Execution
   
The following Professionals are required

Accountants
The accountant will be responsible for a deep analysis of the books of account of the company. He should realize the strengths and weakness of the society. His area of concern should be the trial balance, control accounts, balance sheet, and the cash flows of the business.

Valuation expert
The Valuation expert should be responsible for testing the truth status of the values that are given by the financial statement. Although this may not be the final valuation, at least some insight should be given by the experts. The valuation should cover the followings assets office buildings, furniture, motor vehicles, premises and any other asset that have a market value of above AUD  500.

A computer technocrat
The technocrat should be able to evaluate the strength of the computer system applied in the society. He should also give a report on the internal control of the society.
Lawyer (not at all times, but should be available when needed)
Due to technicality of the law, at least an on call lawyer should be available to spearhead this area. The technicality and the legal system should be adhered to at all times.
We are going to use both covert and overt approaches, they should start with

An interview with the client
This should the initial stage and should be used to provide general information about the business
Getting records and documents
Based on the above two the next step will be identified

REQUIRED PART B
Part A
The balance sheet will be evaluated as if the investigation report is not attached the assumption will be that this is the true statement
Current assets
Bank. 75,000
Account receivable .25,000
Short term inv.        .20,000
Petty cash                  ..... 500
Total                                  125,500

The amounts of current asset are okay and show businesses that have no liquidity challenge. The amounts are good enough for the day to day functioning
Long term assets
 2, motor vehicle ..65,000
Office furnitures..10,000
Office premises900,000
Goodwill..  750,000
Total                           1,725,000

As much as nothing much can be said of the fixed asset, the goodwill looks ridicules. The figure is so huge and may have been calculated to balance accounts.
Current liabilities
Unpaid rent         2000
Unpaid Wage      4000
Total                    6000

The heads of the current liabilities is the weakness of the company.  Both wages and rent are the most necessary expenses of a company. If the company can have issues paying this two it portrays a bad credit history.
Long term liabilities
The bank loan of 40,000 portrays good financial strength of the business.

Part B
The fact that the company was registered as a business for profit and not a nonprofit entity does not have an effect on the financial position.

The balance in the bank is the same as the balance given so it is okay and ultimately brings no effect
The loan balance have been confirmed to be 300,000, it will increase the liabilities side by 260,000.
The investigation showed that no investment was being carried out before and thus the reported figure of 20,000 is reduced by in the asset side.

There was no furniture. This means that the asset side has reduced by 10,000.
The office premises were discovered to belong to other business, the asset side reduces by 900,000
The loan from pacific island was 50,000 this will increase the liability side.

Value of motor vehicle has gone down to 8,000. This has a reducing effect to the asset side by 57,000
The company is hardly known as a result the good will has reduced to Zero.
It will reduce the asset side by 750,000.

Part C
Balance sheet drawn in accordance to international accounting standards (I.A.S)

Pacific Development Society
Balance Sheet
As at 30062009
                                                                       AUD
Fixed assets                            
Motor vehicles                                                  8,000
Current assets
           Bank                                                               75,000
           Petty cash                                                          500
            (This has been assumed to be the true value)
            Account receivable                                         25,000
            (it was assumed to be the correct figure)
Deficit                                                                 247,500
              Totals                                                   356,000
Long term liability
Loan        pacific bank                      50,000
                 Viniji   bank                      300,000    350,000
Short term liability            
 Unpaid rent                                                       2000
(Assumed to be true)
 Unpaid wages                                                   4000
(Assumed to be true)
Total                                                                  356,000          
NB

The figures of unpaid rent, unpaid wages, accrued receivables and petty cash have been assumed to be true.
The deficit of 247 500 is used to balance the account.

Part D
FINDINGS AND RECOMMENADATIONS
ADD (Australasian Aid Bank) bank should not extend the Loan facility because
From the data, the company is highly indebted, and does not have resources that cover the amount of loans advanced.

The company has cheated on its identity to the public and what it was registered for. This is a show of a potential defaulter

The company is not known in the public domains thus its not in business, this is a time bomb
Loan is based on trust and the company seems to have a weakness on the trust that they have.