Executives can help prevent fraud in their organizations by promoting a positive work environment and conveying the message of corporate responsibility and accountability. But it takes more than a spiffy code of ethics.A negative work environment will always spawn low or nonexistent levels of employee morale or loyalty. Employees will be more prone to committing fraud because they feel no obligation to protect it.
Following are some of the components that make up a negative work environment, according to the AICPA report, “Management Antifraud Programs and Controls: Guidance to Help Prevent, Detect Fraud.”
- No reward or recognition for appropriate behavior and job performance
- Negative feedback
- Perceived organizational inequities
- Autocratic rather than participative management
- Unreasonable budget expectations or other financial targets
- Low organizational loyalty
- Fear of delivering “bad news” to supervisors and/or management
- Less-than-competitive compensation
- Poor training and promotional opportunities
- Unfair, unequal or unclear organizational responsibilities
- Poor communication practices or methods within the organization
POSITIVE WORK ENVIRONMENTA positive work environment will help deter fraud while improving the morale and loyalty of employees. According to the AICPA’s report “Management Antifraud Programs and Controls: Guidance to Help Prevent, Detect Fraud,” when employees are in a positive work environment, they’ll be more reluctant to commit fraud that will hurt the organization. Misconduct is reduced when employees have positive feelings about their organization. To create and maintain a positive work environment, management should ensure that:
- Recognition and reward systems are in tandem with goals and results
- Equal employment opportunities exist
- Team-oriented, collaborative decision-making policies are encouraged
- Compensation and training programs are professionally administered
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