How do accounting and financial professionals detect and prevent fraud within their own organizations as well as in others?
Part 1 discusses how assessing the "tone at the top" – that is, the ethical standards of an organization's board of directors and top management – is a good place to start. A poor tone at the top can be a strong indicator of aggressive or questionable financial reporting.
Part 2 contains a case study that won the sixth annual Carl Menconi Case Writing Competition, “Fraud at Buca di Beppo,” which is based on real events surrounding a very successful restaurant chain. The whistleblower’s testimony and investigators' records recount the fraudulent activities of several high-ranking company executives and describe the public and legal fallout of their actions.
Part 3 describes how internal fraud is on the rise despite tougher laws and more aggressive enforcement. By the time external auditors detect fraud using conventional audit procedures, it's too late to avoid catastrophic damage.
Part 4 considers the quantitative reasons for ethical behavior in business. The author recommends that using quantitative tools to analyze ethical decisions should be a part of an organization's profitability calculations.
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