Studies show that organizations that encourage ethical behavior are more resistant to misconduct of all kinds, including financial reporting fraud. A strong ethical culture hedges against all three sides of the fraud triangle – pressure, opportunity, and rationalization. In an ethical culture, pressure to commit fraud is counteracted through sound risk management strategies and appropriate incentives. It will support well-designed controls that reduce opportunities for fraud and increase the likelihood of early detection. A culture of honesty limits an individual’s ability to rationalize fraudulent actions.
Management is primarily responsible for an organization’s culture, and together with the board of directors, sets the “tone at the top” by communicating and visibly adhering to clear ethical principles and codes of conduct and by providing necessary support and resources for robust fraud risk management programs and internal controls.
Another vital ingredient in an ethical culture is skepticism. Management should encourage employees to not only feel comfortable but obliged to question and challenge the results for which they are responsible.
The Anti-Fraud Collaboration produces resources aimed at helping corporations nurture cultures that help deter and detect fraud and equips all stakeholders within the financial reporting supply chain with the tools they need to fight fraud.
Take a look at our corporate culture resources below:
On July 16, 2015, the Anti-Fraud Collaboration hosted a panel of experts to discuss what can be done to deter fraudulent financial reporting. Their discussion provides concrete, actionable steps that governance professionals can take, and helps address that...
Encouraging “manageable dissent, helping employees diverge from “group think,” and building in agenda time for anti-fraud efforts were just a handful of the insights shared in Bloomberg BNA’s recap of an Anti-Fraud Collaboration webcast discussing “The Fraud Resistant...
The key to reducing fraud is to identify the behaviors that could lead to it. Through pressure, opportunity, and rationalization, someone could be led to commit fraud which could cause irreparable reputational and criminal risk to companies. Learn more about this and...
In this second webcast by the Anti-Fraud Collaboration, the group continues its discussion of its new report, “The Fraud-Resistant Organization: Tools, Traits, and Techniques to Deter and Detect Financial Reporting Fraud” The report provides valuable information about...
In this webcast by the Anti-Fraud Collaboration, the group discusses its report, “The Fraud-Resistant Organization: Tools, Traits, and Techniques to Deter and Detect Financial Reporting Fraud” The report provides valuable information about the conditions that might...
The Fraud-Resistant Organization: Tools, Traits, and Techniques to Deter and Detect Financial Reporting Fraud focuses on financial reporting fraud at publicly traded companies. The report provides information about the conditions that might make an organization more...