The Employee's Perspective
William T. Geary
Systems of management control are essential to the prevention and detection of fraud. Inadequately designed or improperly implemented systems of management control create a climate conducive to fraud. A well designed management control system is, however, in itself not a sufficient response to the problem of corporate fraud. Errors, collusion, perpetrations by management, neglect, and changes in the type and nature of business transactions are examples of factors that cause management control systems to fail. In addition to a well designed management control system the corporation must emphasize factors, such as personnel practices that attract and retain competent persons of integrity; a continuous commitment from top leadership, including the board of directors, to education and the maintenance of a corporate culture that strives to prevent and detect fraud; and internal and external audits that deter fraudulent practices and allow corporate personnel and other stakeholders in the corporation to assess the success of control initiatives.
In this chapter corporate fraud is approached from the perspective of the corporation and corporate employees. Responses to the problem of corporate fraud are many and varied. This chapter will present the basic principles of management control systems and discuss the conclusions of