Reflective Writing
Task – Blog #1
I disagree with
the statement that governance and managerial processes have nothing to do with
incidences of fraud.
I witnessed a
case of fraudulent activity due to a lack of governance whilst working at a
software company. A disgruntled employee
was able to change banking information on vendor records. The employee then paid substantial invoices
electronically to a fraudulent bank account.
There was no company policy in place that required either multiple
authorisations or high level management approval to change banking information
on vendor and employee records. The company relied solely on honesty regarding
this process.
Implementing
simple management processes could have prevented this fraud. The risks to the
business if governance is not introduced include significant monetary losses,
loss of credibility and potentially expensive litigation costs.
The role of IT
governance in particular could have prevented such a crime from occurring. An example would be, installing a system that
requires a separate security point for vendor and employee bank account
changes.
It is argued by
Kusnierz (2006) that an organisation
is simply unable to eliminate systematic fraud without the implementation of
managerial processes and technologies that centre on fraud prevention. This is too backed up by Farber (2005) who stated that “empirical evidence indicated that
weak corporate governance is associated with financial reporting fraud”.
Reference List
Kusnierz, R. (2006). Fraud doesn’t matter? Credit Control, Vol. 27 Nos 4/5,
pp. 61-64. Retrived from http://search.proquest.com.ezp01.library.qut.edu.au/docview/208151291/abstract/B7BBF813B7154AA0PQ/1?accountid=13380.
Farber, D.B. (2005). Reporting trust after fraud: does corporate governance matter? The
Accounting Review, Vol. 80 No. 2, pp. 539-561. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/218592597?pq-origsite=360link.