Fraud is defined as intentional falsification of documents to gain unfair or illegal advantage over others. In today’s modern world fraud has become a major problem in the midst of our business organizations. Over the past few years there has been a hot debate on prevention of fraud as the government and other fraud detection and prevention agencies came under heavy public criticism for failure to institute proper and adequate procedures to thoroughly deal with fraud. Many business entities as well as single individuals now express their fears as more wealth and property is likely to be lost in the near future if adequate measures are not taken. There have been several corruption cases in the public as well as in the private sector where potential shareholders have been swindled and defrauded millions of funds including the loss of properties. Enron is a notable world example. (Walter, 1996)
Many research studies have been carried out with the main purpose being to prevent fraud. Despite many mechanisms having come to face, it is still hard to instill transparency into the minds of many people. The more new technological advancements continue to hit the business environment, the more fraud stars modify their dirty tricks to escape these traps. This is what is addressed in this article i.e. (Sarbanes-Oxley Law Not Changing Technology Business Culture). According to this article, there is a perception that in spite many of the surveys being carried out by some of world class certified fraud examiners, not much will be achieved. Sarbanes-Oxley (SOX) passed a law requiring business organizations to monitor every single transaction in order to eliminate the possibility of occurrence of errors and weaknesses. (Andal-Ancion, Cartwright & Yip, 2003)
Even though there is a school of thought that the law has changed the business culture, many organizations still strongly believe that fraud is likely to increase in the future than today. This is an astonishing pronouncement especially to institutional investors and the public at large. Development in information technology is likely to increase high chances of fraud. This thought is not only shared by shareholders alone but also by professionals. In fact professionals strongly believe that the introduction of sophisticated software technologies like C-suite might reduce the ability to check and investigate corporate fraud. This is further supported by the fact that only 17 percent believe there will be shift among the technology business executives to institutional reliability and deception for the anticipated future. A bigger percentage of the respondents are still reluctant and hold a different perception that there has been no change of attitude among the business executives. Dana Herman son, who is a scholar at Kennesaw State University, also believes that corporate scandals and frauds are likely to reduce in the next few years after which they will resurface following the expected period of an economic recess and booms respectively. (Tallman & Fladmoe-Lindquist, 2002)
The most likely forms of fraud that present the greatest risks for the public and private entities include, conflict of interest, fraudulent financial reports and statements, and billing schemes. In the public i.e. government organizations, bribery, reimbursement schemes, inventory and non-cash asset misuse are likely to be enormous. It is therefore the responsibility of every single organization to ensure that weaknesses that can easily cause misconception in the manner in which core transactions are executed are dealt with. Currently there are consultancy firms that offer training techniques on fraud detection and prevention. (McCauley & Khan, 2002)
In addition to this, organizations should try to be compliant as possible. Business leaders should embrace a culture of professionalism ethics by properly implementing a code of ethics and office practice Act. Where there are cases of financial mismanagement independent auditors should be hired for proper investigation and therefore provide an assurance on the company’s affairs. (Tallman & Fladmoe-Lindquist, 2002)
References
Andal-Ancion, A, Cartwright, P. A., & Yip, G. S. (2003). Businesses. MIT Sloan Management Review, 44(4).34-41
McCauley, M & Khan, S. (2002). Citibank’s e-Business Strategy for Global Corporate Banking. Harvard Business School Press.
Tallman, S., & Fladmoe-Lindquist, K. (2002). Internationalization, globalization, and capability-based strategy. California Management Review, 45(1).
Walter, W. (1996). Citibank, and the Rise and Fall of American Financial Supremacy. Phillip L. Zweig, New York.