Financial Performance of Commonwealth Bank of Australia - Annotated Bibliography on Fraud and Money Laundering

This report summarizes an introduction of Commonwealth Bank of Australia and provides an annotated bibliography on fraud, risk assessment, organizational structure and dynamics, money laundering and fraud triangle and individual morality and control systems.

Financial Performance of Commonwealth Bank of Australia
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Title: Financial Performance of Commonwealth Bank of Australia
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Financial Performance of Commonwealth Bank of Australia
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Executive Summary
This report summarizes an introduction of Commonwealth Bank of Australia has been provided.
The unethical scenario of Fraud and money laundering has been given prime importance in this
report. The annotated Bibliography has been presented with emphasis on five articles on fraud,
risk assessment, organizational structure and dynamics, money laundering and fraud triangle and
individual morality and control systems. This is followed by a conclusion that emphasizes the
central theme of the fraud and money laundering act in the bank.

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Contents
Introduction......................................................................................................................................3
Part -2 Annotated Bibliography.......................................................................................................4
Article 1...................................................................................................................................................4
Article 2...................................................................................................................................................5
Article 3...................................................................................................................................................6
Article 4...................................................................................................................................................7
Article 5...................................................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
Appendix........................................................................................................................................12

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Introduction
The Commonwealth Bank of Australia runs a business across Asia, United States, United
Kingdom and New Zealand. It is regarded as “Cosmopolitan Bank and offers plethora of
financial services such as institutional banking, fund management, broking and investment
services, superannuation and funds management. In the corporate history of Australia, one of the
biggest fines has to be paid by the Commonwealth Bank of Australia for the breach of counter
terrorism and money laundering acts (Bosworth‐Davies, 2007).
Austrac, the financial crime investigation agency has filed a lawsuit against the
Commonwealth Bank of Australia. The biggest giant-CBA has been asked to pay the seven
hundred million Australian dollars. The Austrac has reported more than fifth-three thousand
default account transactions and ATM operations. The crime investigation, officials have asked
the bank to report all the business transaction within the ten working days. According to the
bank, the transactions underwent through a website coding error and this has resulted into the
terrorist gang grid across the whole system. The Commonwealth Bank of Australia has been
trying to reach the settlement.
The following points must be under consideration-
1. The commonwealth bank has been unsuccessful in monitoring the transactions on more
than 7, 50,000 accounts. All the transactions are under the money laundering red flag.
2. The bank has been unable to perform the continuous check for more than sixty suspicious
customer accounts. These counts were un-operational for a period of 3 years from
October 2012 to October 2015 (He, 2006).
3. The bank has been unable to evaluate the risk with regard to IDMs.

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Acknowledgement of Catastrophe-The Behavioral factor
At large, the Australian community is at risk. The investigation, officials have further added-
the bank supports terrorist attacks and has enabled many crime groups to exploit the
upcoming immigrants from all over the globe towards drug and fraud.
The Australian economy has to bear the results of the worst compliance system and this has
enforced other businessmen to undertake the responsibilities seriously towards the society.
Part -2 Annotated Bibliography
Article 1
Reference- Suwardi, E. and Puspasari, N. (2016). The effect of individual morality and internal
control on the propensity to commit fraud: evidence from local governments. Journal of
Indonesian Economy and Business,, [online] Volume 31(2), pp.208 – 219
Link- Retrieved from: https://doaj.org/article/673cf9a4d7bd4d60a e6bb52cd6abcb71
In the first article, Puspasari N, examines the stimulus of internal controls and individual
morality that are promised for accounting the money laundering and fraud at local and
government levels (Suwardi and Puspasari, 2016). Individual principles and ethics are a
necessary aspect of an organization. The research individuals have conducted hypothesis and has
the tendency to account for the frauds. There is a larger interconnection between the internal
controlling system and moral principles (Harvey, 2005).
The internal control system must be implemented by the banks for safeguarding the
company interests. These ensure the detection of fraud integrity at all large levels. Internal

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control requires segregation of responsibilities and this forms an important component of the
internal controlling system. This can reduce the bank fraud and risk at each level. The article
summarizes disadvantages as below-The reconciliation needs to be completed through one sole
person. A Person must be independent of the bookkeeping duties and this requires a supervisory
review. The analysis of bank statements is necessary aspect that cannot be ignored at any level.
The banks need to understand that all the expenses made are in connection with the agency
business and endorsements must be appropriate. All the reviews must be submitted on time and
reconciliation has been performed.
Article 2
Reference- Fisher, C. (n.d.). Real time affect at work: A neglected phenomenon in
organisational behaviour.
Link- Retrieved from: http://ezproxy.acu.edu.au/login?url=http://se
In the second article, Fisher summarizes the organizational change and neglected
phenomenon of supervisors at work. The advantages of article can be summarized below-the
entire organization will be undergoing through the change and study the effective ways that
provides the process perspectives. Organizational change can be regarded as the management
theory that evolves through different changes and perspectives provided on the different
processes. The organizational changes are effected in the short term as well as long term. The
disadvantages of this article can be summarized below-The bank needs to adopt the different
strategies for navigating to different circumstances (Fisher, n.d.).
The organizational change requires reaction from the personnel’s of the organization. The
existing system needs to be improvised and all the problems must be highlighted. The managers

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must focus on the communication system and practices must be sorted. The company officials
need to brainstorm the ideas and possible solutions of the problems. This requires a lot of time
and work. The narrowing down of options will take a lot of time. The legitimate innovations are
necessary in the selected strategy or a given system. New ideas will be implemented and
employees need to practice new systems. An organizational change eventually becomes the new
contribution towards the society (Alexander, 2005).
Article 3
Reference- Roden, D., Cox, S. and Kim, J. (n.d.). The fraud triangle as a predictor or corporate
fraud. [online] pp.5-15.
Link- Retrieved from:-
http://ezproxy.acu.edu.au/login?url=http://search.ebscohost.com/login.aspx?
direct=true&db=bth&AN=116597883&site=ehost-live&scope=site
In the third article, the author Roden D.M analyzes the amount of financial money
laundering and business failures that are the concerns of corporate organizations. The advantage
of this article includes-New auditing regulations and standards have been maintained. The needs
of the investors must be targeted and auditors must concentrate on the detection of such frauds.
The disadvantages includes-There is a high responsibility of auditor as they need to identify the
irregularities and reporting errors. A high attention is required for finding the auditor
qualifications and explicit guidance must be provided by the supervisors for finding the fraud
detection (Roden, Cox and Kim, n.d.).
A lot of time is wasted on interviewing the persons and finding for the fraudulent
activities. The personnel’s can get into a lot of pressure. At times, it is required to take expertise

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from academic professionals/ Evaluation of information takes a lot of time. Recent studies have
been undertaken on the assessment of risk for financial reporting. These are mainly focused
towards the red flags or money laundering. The scholars have prepared the list of different
indicators that have provided the subjective judgment that shall be made available to the
auditors. The policymakers and stakeholders of the company do not have any right to access the
list of right flags for identifying the corporations that engage with fraudulent reporting system
(Simser, 2012).
Article 4
Reference- Claybourn, M. (n.d.). Relationships Between Moral Disengagement, Work
Characteristics and Workplace Harassment.
Link- Retrieved from:
https://link-springer-com.ezproxy2.acu.edu.au/article/10.1007/s10551-010-0680-1
In the fourth article, Claybourn, M has analyzed on the fraud firms, are matched with
non-corrupted firms. Different models have been utilized for the evaluation of fraudulent
reporting. According to the author- the advantages of this study include new engagement of the
clients; model is applicable for the evaluation of financial statements. The more emphasis has
been laid on the empirical findings. The disadvantages of the article include-the firms need to
spend a lot of time in performing the regression model on the fraudulent reporting. There is
greater financial pressure through the firm supervisor. The percentage of transactions performed
in the firm are very complex in nature (Claybourn, n.d.).
The integrity of managers is a questionable aspect and the organization can undergo
through the deterioration between the auditor and firm. In the fraud triangle, the accurate

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classification can be lower than expected and this leads to confusions. There is a huge
responsibility on auditor for the classification of fraudulent activities. A predictive model has
been created for conducting the empirical studies. The majority of internal and external auditors
are presented with the questionnaires and red flag studies have been undertaken regarding fraud.
It has been observed questionnaires subjective and lengthy. Management needs to adopt the
stringent policies and prepare the plans carefully.
Article 5
Reference- Csaszar, F., Ranjay, P. and Tushman, M. (n.d.). Organizational structure as a
determinant of performance: Evidence from mutual funds.
Link- Retrieved from:
https://onlinelibrary-wiley-com.ezproxy1.acu.edu.au/doi/epdf/10.1002/smj.1969
In the fifth article, organizational structure is a determinant of financial performance has
been discussed by Csaszar, F.G. The studies have examined whether financial ratios are effective
in the determination of fraud. Fraud model has been constructed and that is being used publicly
to assess the empirical fraud and ris (Csaszar, Ranjay and Tushman, n.d.).
The advantages of this article include- analytical procedures are widely applied to all the
financial procedures along with operating data. Capital turnover, financial leverage and firm
magnitude are significant variables for the detection of fraud. Opportunity factors are considered
of great advantage to the auditors. The disadvantages provided in this article are- The financial
ratios have limited the ability of detecting the fraud. An important aspect is management
characteristics are vital predictor of money laundering and risk. The financial ratios cannot be
considered enough. The existing investigation is based on the examination of different risk

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factors that can detect the fraudulent reporting. Auditing needs a lot of practice along with
improvements in fraud assessments. A financial statement is related to the fraud triangle. There
is more sensitivity to overall fraud and risk and incentive cues are required for auditors. The
Fraud prediction model has been developed through Wright and Skousen and this has a number
of opportunities along with pressures (Ruiz, 2004).
Conclusion
The Commonwealth Bank of Australia underwent through identifying conditions, but
was unable to identify the risks. This is specifically due to the concealed fraud and financial
statements. The auditing team needs to focus on the risk and fraud variables. Although, the risk-
related and money laundering and fraud factors are presented to the corporate organizations in
different circumstances. What is a reason behind for committing the fraud in a firm? This can be
attributed to incentive pressure and manipulated earnings. The Financial stability of a corporate
firm is susceptible to industry factors and the economy (Ping, 2004).
Management is under great pressure to meet with the expectations of different parties.
When corporate organizations undergo through the different risks, this is highly attributed to
larger capital expenses and material misstatements. The firm needs to have a strong internal
controlling system and inappropriate financial statements. There is imposed pressure on the
financial institutions to attain earnings expectations. The firm needs to avoid the negative
capitalized earnings and report the increase accurately. An important reason behind the
fraudulent activities is the inability of the management to estimate the earnings. The annual
meetings must take place on time and financial forecasts must be taken into account. There is a
greater likelihood of reducing the fraudulent activities through above approaches.

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References
Alexander, R. (2005). The 2003 Money Laundering Regulations. Journal of Money Laundering
Control, 8(1), pp.75-94.
Bosworth‐Davies, R. (2007). Money laundering – chapter five. Journal of Money Laundering
Control, 10(2), pp.189-208.
Claybourn, M. (n.d.). Relationships Between Moral Disengagement, Work Characteristics and
Workplace Harassment. [online] Available at: Harassmenthttps://link-springer-
com.ezproxy2.acu.edu.au/article/10.1007/s10551-010-0680-1 [Accessed 30 Aug. 2018].
Csaszar, F., Ranjay, P. and Tushman, M. (n.d.). Organizational structure as a determinant of
performance: Evidence from mutual funds. [online] Available at: https://onlinelibrary-wiley-
com.ezproxy1.acu.edu.au/doi/epdf/10.1002/smj.1969 [Accessed 30 Aug. 2018].
Fisher, C. (n.d.). Real time affect at work: A neglected phenomenon in organisational behaviour.
[online] Available at: http://ezproxy.acu.edu.au/login?url=http://se
arch.ebscohost.com/login.aspx?direct=true &db=azh&AN=9373663&site=ehostlive&scope=site
[Accessed 30 Aug. 2018].
Harvey, J. (2005). An evaluation of money laundering policies. Journal of Money Laundering
Control, 8(4), pp.339-345.
He, P. (2006). Lawyers, notaries, accountants and money laundering. Journal of Money
Laundering Control, 9(1), pp.62-70.
Ping, H. (2004). Banking secrecy and money laundering. Journal of Money Laundering Control,
7(4), pp.376-382.

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Roden, D., Cox, S. and Kim, J. (n.d.). The fraud triangle as a predictor or corporate fraud.
[online] pp.5-15. Available at: http://ezproxy.acu.edu.au/login?url=http://s
earch.ebscohost.com/login.aspx?direct=tru
e&db=bth&AN=116597883&site=ehostlive&scope=site [Accessed 30 Aug. 2018].
Ruiz, M. (2004). Lawyers and money laundering. Journal of Money Laundering Control, 7(3),
pp.272-274.
Simser, J. (2012). Money laundering: emerging threats and trends. Journal of Money Laundering
Control, 16(1), pp.41-54.
Suwardi, E. and Puspasari, N. (2016). The effect of individual morality and internal control on
the propensity to commit fraud: evidence from local governments. Journal of Indonesian
Economy and Business,, [online] Volume 31(2), pp.208 – 219. Available at:
https://doaj.org/article/673cf9a4d7bd4d60a e6bb52cd6abcb71 [Accessed 30 Aug. 2018].

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Appendix
Article
1
Article
2
Article
3

Financial Performance of Commonwealth Bank of Australia
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Article
4
Article
5