Fraud examiners face ethical dilemmas on a regular basis. Maintaining a code of professional ethics in the anti-fraud profession is not only critical for your practice, but also for self-preservation. Similarly, maintaining an effective compliance program is an absolute necessity to protect your organization from various risks, including fraud, financial losses, litigation and reputational damage.
Growing up, we all tried at some point or another to squirm our way out of being accountable for something we shouldn’t have done or said. (I admit to throwing my little brother under the bus a couple of times, but my parents were wise to that approach.) We spun the facts or rationalized our action to avoid punitive measures; in short, we wanted to preserve our standing in the family unit and stay in Mom and Dad’s good graces. But alas, many of us suffered some parental wrath as a consequence for our behavior — and the fictitious tales we told to rationalize it. Our parents knew something we kids didn’t fully appreciate: Rationalization allows us to wander further away on the far side of truth. As adults gaining experience in our respective professions, we learn about compliance and ethics, but we also add to our repertoire of rationalizations.
Let’s say you find an accounting regulation violation that your organization might have ignored for years. You bring your concerns to your boss who agrees you’ve discovered a problem. Other accounting department staff members concur until they figure out the restatement costs. You stew over this and realize that your organization is breaking the law.
It doesn’t matter what kind of organization makes the news — whether it’s a manufacturing plant, a sales and marketing company, an importer, a nonprofit, a university or a government entity — when someone behaves badly, someone else usually knows. Fraudsters seldom stop to consider the effects of their actions for their organizations and the people who are witnesses to and/or complicit in the fraud, nor do they let potential consequences change their behavior.
The ACFE, the world’s largest anti-fraud community, continues to thrive in an increasingly challenging environment, growing its membership, expanding its presence across the globe and becoming more diverse and inclusive. That’s the message from the most recent ACFE Report to Members.
Most would agree that a strong ethical culture is essential to preventing fraud within any organization. But what makes a good or bad ethical culture and why do...
An internal auditor usually analyzes an organization’s ethics when it has an important impact on other key governance aspects, such as risk management, compliance, strategy and how it conducts its business. Strong ethics helps an organization perform better. Here are some practical difficulties that auditors might face when auditing an organization’s governance (not an exhaustive list):
Learn about common circumstances that lead to ethical lapses in judgment and gain insights into the potential consequences of your actions.
Bryan Fogel has most likely never performed a ratio analysis on corporate financial statements or testified in court during a fraud trial, but the story he told through the Academy Award-winning documentary, ICARUS, resonates with what we do as fraud examiners.
