How to counter corporate fraud

One of the most common elements among the firms, which countered frauds is the involvement of senior management in the frauds including members of the Board of Directors, the CEO, the CFO, and other key executives. It is attributed mainly to the culture of that organization demonstrated by the tone at the top, which sets the corporate culture and in many cases is a root cause of the unethical conduct and fraudulent activities (Sweeney, 2003). Culture issues start in accounting adjustments leading to massive fraud by attempting to fix each quarter’s numbers to close the gap between targets and actual results.

It is an informative post regarding corporate fraud. There are some consequences for the fraud.

• Loss of reputation

• Negative returns

• Increase the cost of capital

• Lose market share

  There are some recommendations that could help to prevent the fraud in organizations.
• The incentives could be paid for employees after completion of projects.
• Reducing the operational risk.
• Select the appropriate accounting and finance approach for the organization.
• The payment of stocks to be minimized

Reference:

Pavel, T., & Encontro, M. (2012). The Enron Scandal. Göteborg: Chalmers University of Technology. Retrieved 3 6, 2019, from http://www.math.chalmers.se/~rootzen/finrisk/GR7_TobiasPavel_MyleneEncontro_ENRON.pdf

Kurant, P. (2014). Corporate Fraud and its Consequences: An Empirical Study. FEP. Retrieved 3 5, 2019, from https://sigarra.up.pt/fep/pt/pub_geral.show_file?pi_doc_id=27703

Rockness, H., & Rockness, J. (2005). Legislated ethics: From enron to sarbanes-oxley, the impact on corporate america. Journal of Business Ethics, 57(1), 31-54. doi:10.1007/s10551-004-3819-0