Assessing corporate culture can help deter fraud
Doing regular assessments of corporate culture can help deter and uncover fraud to help leaders address problems before they lead to scandal, according to a new report.
The report comes from the Anti-Fraud Collaboration, a joint effort of the Center for Audit Quality, Financial Executives International, the National Association of Corporate Directors and the Institute of Internal Auditors. The white paper, "Assessing Corporate Culture: A Proactive Approach to Deter Misconduct," recommends several approaches to help companies perform periodic assessments of the state of their culture, including culture dashboards, orientation processes, employee information gathering, incentives, problem identification and proactive listening.
“One significant step in assessing culture is determining who owns it,” said the report. “While ultimate responsibility should lie with the board, that is not the case in many organizations. Management should take primary day-to-day responsibility for an organization’s culture. A culture dashboard with a variety of metrics is an excellent way for companies to collect and monitor information related to an organization’s culture holistically. Organizations should mobilize cross-functional teams or committees to determine how best to obtain information for an effective assessment.”
The four organizations have worked together for years on ways to deter fraud. "Building on the Anti-Fraud Collaboration’s decade-long efforts to raise awareness of the influence of corporate culture on conduct, this white paper emphasizes the efficacy of regular assessment in deterring and detecting those elements of culture that can serve as a breeding ground for misconduct," said CAQ executive director Julie Bell Lindsay in a statement. "With the practical monitoring outlined here, corporate culture can be a valuable asset in reinforcing desired behaviors, mitigating risk, and maintaining marketplace and shareholder confidence."
In addition to discussing the importance of organizational culture, the white paper describes some of the roles and responsibilities for maintaining and influencing culture, which typically fall to boards of directors and senior management.
“It is well established that companies with strong, ethical cultures can better resist fraud,” said FEI president and CEO Andrej Suskavcevic in a statement. “FEI urges company leaders in the finance function and beyond to consult this publication to guard against financial fraud.”
“Maintaining a healthy corporate culture is a complex task, requiring sustained effort on multiple levels,” said IIA president and CEO Richard Chambers (pictured) in a statement. “By taking a closer look at the process of culture assessment, this new resource from the Anti-Fraud Collaboration will help internal auditors and others address that complexity.”