Ways to Help Prevent Corporate Fraud

Executives have the means to commit and cover up the largest frauds.

They have access to the information and computer systems, they have power over all employees and they have access to the money. The finance function is riddled with fraud risks and the company’s executives are in the best position to take advantage of those risks.

Because of the risk of losing large sums of money to fraud by executives, companies must ensure owners and boards of directors are actively involved in creating and maintaining an environment that is not conducive to fraud. This involves active oversight of daily operations, continuous monitoring of potential red flags of fraud and swift action when fraud is discovered.

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Sarbanes-Oxley Five Years Later

This week’s Wisconsin Law Journal column takes a look at the Sarbanes-Oxley Act of 2002, which was put into law five years ago. The legislation has done some good things, but many have significant criticisms of it. The law was intended to protect retail investors in public companies by bringing certain standards to the financial reporting process.

Sarbox requires executives to certify financial results and be held accountable for the accuracy of financial data. The legislation also attempted to bring more transparency to the independent audit process.

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