Why the risk of wrongdoing has migrated from senior executives to middle management — and what to do about it.
With recession looming larger with each passing day, fraud is ever more likely to rear its ugly head. Unlike the last recessionary period beginning in late 2001, today's fraudsters are more likely to come from middle management than the C-suite. What happened to change things in the intervening years? Section 404 of the Sarbanes-Oxley Act of 2002.
Since then, chief executives, CFOs, and other managers have learned that their jobs are on the line if they violate the famed internal controls-provision of Sarbox, says Yigal Rechtman, head of the forensic accounting department for Buchbinder, Tunick, and Company, an audit firm. As a result, corporations have become saturated with "a false sense of security because c-level executives and the board are trained to talk Sarbanes-Oxley."
advertisement
What's more, the compensation of top management of many companies has risen so strongly since the last recession that they have simply too much to lose to commit the kind of fraud that the top execs of Enron, WorldCom, and so many other companies committed around the turn of the century, the fraud sleuth reasons.
See full Article.
Posts
