Summary:
The blog I read was about how to prevent corporate fraud. According to the blog, most firms tries to prevent corporate fraud by cutting budget and reorganizations; however, this in fact will increase the risk of fraud. There are a few suggestions that this blog mentioned which helps reduce the chance of fraud. The first one is to conduct criminal checks for the applicants of the financially sensitive positions. Also, develop a strong ethical working environment to encourage workers to work ethically. Lastly, set up an anonymous hotline to report fraud. Once there is a call comes in, the firm should take action as quickly as possible to confirm the truth.
Connections:
Corporate fraud has become a serious business issue in these days. From chapter three, we know that there is many financial information we could find in the financial statements. For example, the performance of the business’s daily operation is reflected by its income statement. Due to that, most investors and bankers use those financial statements to determine whether they should invest in or lend money out those that particular company or not. With corporate fraud, people overstate the performance of business which misleads the decisions of the investors and bankers. Corporate fraud is not only a crime, but it is also a behaviour that cost a huge lost in the world’s economy. Because of the internet today, people can buy stocks in other countries, so a large number of people may be affected by this.
Personal Reflection:
In an economic recession period like now, no one can afford a corporate fraud. In today’s society, people could not just afford a living with just a job, so they must have a “part-time” called investing. Due to the lost of the last crisis, a lot people just want to carefully invest in those companies which have a steady growth. However, the world is not as ideal as people wish; there are still frauds out there. The main reason that I think frauds occur is because of the auditing policy of the financial statements are not tight enough. So in December 15th, 2009 a new quality control standard has come in effect for all audits of financial statements in Canada.
