Week 8: Culture

CEO ANC Inc

“It has been argued that the ‘culture’ of an organisation plays a large part in incidences of fraud, bribery and corruption, yet companies continue to ignore this and focus more on internal control measures only”.

In light of what you have learnt about fraud, bribery and corruption prevention and risk management, do you agree or disagree with the above statement? What recommendations would you make to the CEO on how fraud, bribery and corruption can be minimised in relation to the culture of an organisation?

What are your views/experiences?

Provide support for your answer.

I wholeheartedly agree with the above statement that culture plays an integral part in incidences of fraud and I agree that more importance needs to be placed on it by companies.

I understand that ‘culture’ is a rather broad term, so to ensure everyone understands, I believe the culture of an organisation refers to the organisation’s collective beliefs, values, and attitudes (Bush, T. & Middlewood, D., 2013).

(McShane, S., Steen, S., 2012)

In my experience, culture has a significant impact on how employees view their firm and if they can rationalise committing fraud. In a prior job it was discovered that one of my colleagues had been committing fraud for 2 years before being detected, and when questioned as to his reasoning, he responded that he ‘wasn’t being paid enough’ and his ‘manager didn’t care about the business processes being conducted properly’, so he felt like the business was asking for it.

All CEOs need to recognise that creating the right culture can significantly decrease the risk of fraud occurring. An ethical culture with a zero fraud tolerance often stops cases like the one above because the rationalisation is no longer available that the business doesn’t care (Aucoin, J., 2012).

Standards Australia AS-8001-2008 (Standards Australia, 2008) focuses on fraud prevention and control, and provides valuable ways to decrease fraud through better culture, including:

 
The COBIT 5 Risk Principles can help companies ensure that the AS-8001 standards are being met. COBIT 5 Risk looks at Risk Principles and helps identify an organisation's Risk Culture (and therefore, Risk Appetite) (ISACA, 2012).

 (ISACA, 2012) 

Sources

Aucoin, J. (2012). Seven Ways to Build a Culture with Zero Tolerance for Fraud. Retrieved May 15^th, 2016, from http://www.msabc.net/workshop%20archives/Seven%20Ways%20To%20Build%20A%20Culture%20WIth%20Zero%20Tolerance%20For%20Fraud%20-%20Jeff%20Aucoin.pdf

Bush, T. & Middlewood, D. (2013). Leading and Managing People in Education [EBLS Version] (pp. 47). Retrieved May 15^th, 2016, from http://www.sagepub.com/sites/default/files/upm-binaries/9740_036187.pdf

ISACA. (2012). COBIT 5: For Risk. Retrieved May 15^th, 2016, from https://blackboard.qut.edu.au/bbcswebdav/pid-6300325-dt-content-rid-6139368_1/courses/AYB115_16se1/Slides%20on%20COBIT%205%20RISK_OK.pdf

McShane, S., Steen, S. (2012). Canadian Organisational Behaviour (8^th Ed.). Whitby, ON.

Standards Australia. (2008). Fraud and Corruption Control. Retrieved May 15^th, 2016, from https://www.saiglobal.com/PDFTemp/Previews/OSH/AS/AS8000/8000/8001-2008.pdf