5/25/2023 0 Comments Keep an eye out![]() So, for starters, establish strict policies regarding when it’s permissible to do so. However, to best prevent executive fraud, you may need to take extra steps.Īt many businesses, senior managers have the authority to override internal controls. There’s no doubt that internal controls are imperative to preventing and detecting any occupational fraud. Substance abuse or a gambling problem can also impair judgment. ![]() Dishonest execs may think “everybody does it” or that they “deserve” more than they legitimately earn. This is particularly true when the company doesn’t implement or enforce strong internal controls.ģ. As mentioned, these individuals often have the access and authority to commit fraud without getting caught immediately. Executives may also feel they have to pump up sales numbers or falsify financial statements to shore up their professional performance.Ģ. The resulting pressure can drive some individuals to overextend their personal finances until debts become insurmountable. Executives may feel they need to maintain a lavish lifestyle that involves things such as multiple real estate properties, expensive cars and exotic vacations. While your leadership team is likely made up of trustworthy colleagues, it’s still a good idea to keep an eye out for executive fraud and set up defenses against wrongdoing.įorensic accountants use a paradigm called “the fraud triangle” to explain why occupational fraud occurs. Senior-level execs are in a prime position to not only inflict substantial amounts of financial damage, but also severely impair the reputation of the business in question. Perhaps its most dangerous variation is executive fraud - that is, wrongdoings by those in the C-Suite. ![]() Occupational fraud can be defined as crimes committed by employees against the organizations that they work for.
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