Mayfield Childcare releases findings of final forensic report into financial irregularities

A final forensic accountant’s report, commissioned by Mayfield Childcare to investigate suspected misappropriation of company funds and misallocation of payments to misrepresent earnings, has provided more context on the matter first announced in late February 2023. 

 

Advisory and investment firm KordaMentha were initially engaged following the discovery of financial irregularities following the review of historical supplier payments made for the purposes of preparing the Company’s CY2023 Capex budget. 

 

The interim report, released by KordaMentha in late February 2023, provided preliminary context as to the extent of the problem but fell short of providing specifics, and details of monetary value. 

 

The final report, however, gives more context on these matters with the following key highlights being released:

 

Specific nature of irregularities

 

There were two areas identified by the report namely:

 

1. Misappropriation of funds

 

The report concludes that funds totalling $374,713 were misappropriated (Definition: to appropriate wrongly. especially: to take dishonestly for one’s own use) and used to pay for works undertaken at two residential properties and two childcare centres.

 

2. Misallocation of payments

 

In addition, the report concluded that payments totalling $835,714 were misallocated to deliberately misrepresent earnings, apparently in connection with the misappropriated funds. 

 

Responsibility for irregularities 

 

The name of the individual responsible for the misappropriation of funds and misallocation of payments has not been included in Mayfield’s latest release. 

 

However, it does confirm that a former senior employee / director was responsible and that this individual owned the two residential properties and was connected to the two childcare centres at which work was carried out with stolen funds. 

 

In addition, it confirms that this individual directed the misallocation of payments internally. 

 

Recourse to Mayfield 

 

Mayfield is receiving advice from its external legal advisors in relation to the recovery of misappropriated funds which includes the potential preservation of assets sufficient to compensate them for aunty loss and damage suffered. 

 

The company has also acknowledged that it will pursue the costs of the forensic investigation and the preparation of the final report plus interest outstanding. 

 

Impact on Mayfield 

 

Mayfield continues to assess, in consultation with its auditors, whether the misallocated payments discovered will require a restatement of previous financial statements; however, confirmed that CY2022 results would not be impacted at this juncture. 

 

An internal review will now commence reviewing transactions prior to the investigation period looked at by KordaMentha which spanned 1 January 2020 to 31 December 2022.