Corporate Govern an Financial Crime Ethics -Myassignmenthelp.Com

Question: Discuss About The Corporate Govern An Financial Crime Ethic? Answer: Introduction White-collar crime has been defined by Sutherland as a crime that is being committed by a person of high status and respectability during the course of his occupation. It has the capability to cause financial agony to the society. Frauds are related to various financial crimes that occur or arise in the society. Its indicators can identify white-collar crimes and types of fraud committed in society. Ethics control and corporate governance acts in the process of preventive measures (Gottschalk, 2016). Corporate crimes are the offences against the employees, consumers, investors, state and the public. Theories of motivation and ethical theories can affect the financial crimes. However, there are ways to detect and prevent white-collar and financial crimes. Ethics play a major role to help prevent and detect financial crimes. Discussion White-collar financial crimes in terms of its ability to cause financial distress to society - The term Financial Crime is also known as white-collar crime, which refers to a crime that is being committed by a person who belongs from a respectable high social status during his occupation. Another alternate term of financial crime is corporate crime (Zaring, 2014). This term refers to a situation where individuals or a corporation who are associated with a corporation commits a crime. Victims of financial crimes are governments, individuals, economies and corporations. The exploitation of the confidential information or acquiring another persons property by deception would consistently be done with the purpose protecting a benefit. It is capable of distressing the society. The crimes affect the individuals living in the society. Dynamics of Fraud triangle and theories of motivation for financial crime - Financial crimes majorly deal with and comprises of corruption, fraud, terrorist financing, market abuse and money laundering. The various types of fraud that can take place and is included in the definition of financial crime are banking fraud, insurance, securities, investment fraud, and intellectual property fraud. The fraud triangle exists for detecting high-risk fraud situations (Schuchte Levi, 2016). Pressure is the first element which focuses on the emotional or financial force pushing towards fraud. Secondly, rationalization is the personal justification of dishonest activities. Thirdly, opportunity deals with the capability to execute plan without being caught. A theory of motivation that is associated with financial crime is interactionist theory of motivation. This theory deals with the general structures of their experience. It makes certain courses of action seem appropriate while others are exc luded. Society is an elaborate fiction that helps to make sense of the relationships. To develop the understanding process of human interaction is what this theory is. Interactionist theory aims in which way the individuals will act to social stimulation. Intention to deceive fraud Fraud is an intentional deception that is made for damaging another individual or for personal gain. Fraud is treated as a crime and a civil law violation. Fraud in companies is usually committed through mails, internet and phones (Rutschmann Wiegmann, 2017). Defrauding people of money is the most common type of fraud. For proving fraud in court, deliberate misrepresentation of the facts. Types of fraud Detecting the fraud occurring in business are an important step for building an appropriate control environment (Baesens, Vlasselaer Verbeke, 2015). The common types of fraud are the following: False accounting The purpose of false accounting is to deliver the affairs and results of the organization. It is done by overstating the liabilities and assets that reflects the company. There are commercial pressures to report the level of earnings that can precedent over the controls to prevent fraud occurring. Computer Fraud A computer is regarded as an object of a fraud. Intellectual properties can be stolen by unauthorized access to a computer system. Various types of fraud can be carried out with the help of computers. Infringement by third parties Infringing design rights, manufacturing any product without license and passing off fake products as genuine products are treated as fraud.Fraud triangle The theory of fraud triangle is a framework set up for identifying those risky fraud situations that are high. The three elements that forms the fraud triangle are pressure, rationalization and opportunity (Hadi, Anuar Paino, 2016). Pressure is the financial force that pushes towards fraud, rationalization is the personal justification of dishonest actions and opportunity is the ability to execute the plan without being caught. Indicators of fraud The indicators of fraud are the financial difficulties, unwillingness to share duties, addiction to problems, defensiveness, unusual close association with any customer, fund transfers among company bank accounts and deficient screening procedures for new employees (Purda Skillicorn, 2015). Ethics, control and corporate governance in the context of preventive measures Appropriate corporate governance leads in preventing fraud. Organizations set up corporate governance. Ethical behavior must be present on the part of the organizations management. Assessing the risk of fraud within the organization is essential since it can figure out where internal deficiencies exist and how the organization can improve (Soltani Maupetit, 2015). Fraud prevention measures must be implemented. For instance, efficient ethics and HR policies should be hired. Ethical conduct and ethical employee training must be provided for avoiding fraud in the organization. Morality and Legality - Morality is the right behavior used in difficult situations. Ethics reflect the moral standards and act upon them. The role of ethics is to set to moral standard for behavior in many professions (Petrazycki, 2017). Legal issues are the laws that take care of the criminal offences and financial crimes of an organization. Ethical theories These act as a part of the decision making process. Ethics play an important role in dealing with financial crimes. The first theory is the deontological class of ethical theory. According to this theory, people should adhere to their compulsions and duties that are engaged in the process of decision making. Deontology consists of positive attributes but also has flaws (Newton, 2017). Any individual who adheres to deontological theory will have to produce the decisions since they are based on the individuals set of duties. The second form of theory is utilitarianism. It is based on a persons ability to forecast the consequences of an action. The benefit of utilitarianism values justice and includes beneficence simultaneously. Thirdly, ethical theories are based on rights. The rights are established by a society and are kept protected. A major complication of this theory is that one must interpret the features of the rights in the society. Fourthly, the virtual theory is that where a person is judged by their character than by an action. System by which companies are directed and controlled Corporate governance acts as a system that directs and controls the system of the companies. A good corporate social responsibility directs the managers and the employees of the company. Corporate governance is set up for the controlling and checking the systems so that no fraud can arise (Ntim, 2018). The purpose of corporate governance is to provide effective and prudent management that can produce long term success of the company. Board of managers are responsible for directing and controlling the company. Monitoring process The activities of the employees are monitored to make sure that they are being accomplished and deviation is being corrected if needed. Monitoring has an essential expectation of compliance management and ethics. The purpose of monitoring the business activities is to help the managers gain insight into important transactions and processes within an enterprise (Ruggiero Vos, 2014). It enables the organization to analyze and measure the process performance and to identify any problem. The activity transactions, costs incurred, risk of non-compliance is the monitoring steps that are followed in an organization. Detecting the financial crimes is important for the organization. Whether ethics and governance could control and prevent financial crimes - Ethics is regarded as a set of rules that define right and wrong conduct. Ethics help to prevent white-collar crimes in various ways (McAlister, Marcos Ferrell, 2016). Ethics is treated as a key ingredient of good governance. The ethical behavior of the leaders assumes global importance. There are code of principles and a set of values that overviews the activities and decisions within a company. If the leaders follow the ethical codes, the amount of financial crimes will reduce gradually. Conclusion Financial crimes and fraud has been in the picture for many years. As societies developed, the rate of crimes also increased and of various patterns. This is so due to advancement of science and technology. Ethics should be present in organizations and companies to reduce the amount of these crimes as discussed above. Employees commit fraud due to ill behavior and under pressure. Awareness must be spread in every organization regarding the ways or methods to control the risk of white-collar and financial crimes. The criminal justice system of Singapore is set up to control white-collar crime but it also has a few restrictions. The criminal justice system is difficult to be applied in the corporate world. It has a reactive reaction against the white-collar crimes. Ethics and governance can control and prevent financial crimes. References: Baesens, B., Vlasselaer, V. V., Verbeke, W. (2015). Fraud: Detection, Prevention, and Analytics!.Fraud Analytics Using Descriptive, Predictive, and Social Network Techniques: A Guide to Data Science for Fraud Detection, 1-36. Gottschalk, P. (2016).Understanding white-collar crime: A convenience perspective. CRC Press. Hadi, A., Anuar, K., Paino, H. (2016). LEGAL PERSPECTIVES TOWARDS FORGERY, FRAUD AND FALSIFICATION OF DOCUMENTS: RECENT DEVELOPMENT.Malaysian Accounting Review,15(2). McAlister, D. T., Marcos, S., Ferrell, O. C. (2016). Corporate governance and ethical leadership.Business Ethics: New Challenges for Business Schools and Corporate Leaders: New Challenges for Business Schools and Corporate Leaders, 56. Newton, M. T. (2017). A Comparison of Ethical Theories. Ntim, C. G. (2018). Defining Corporate Governance: Shareholder Versus Stakeholder Models. Petrazycki, L. (2017).Law and morality. Routledge. Purda, L., Skillicorn, D. (2015). Accounting variables, deception, and a bag of words: assessing the tools of fraud detection.Contemporary Accounting Research,32(3), 1193-1223. Ruggiero, A., Vos, M. (2014). Social media monitoring for crisis communication: process, methods and trends in the scientific literature.Online Journal of Communication and Media Technologies,4(1), 105. Rutschmann, R., Wiegmann, A. (2017). No need for an intention to deceive? Challenging the traditional definition of lying.Philosophical Psychology,30(4), 438-457. Schuchter, A., Levi, M. (2016). The fraud triangle revisited.Security Journal,29(2), 107-121. Soltani, B., Maupetit, C. (2015). Importance of core values of ethics, integrity and accountability in the European corporate governance codes. Journal of Management Governance, 19(2), 259-284. Zaring, D. (2014). Litigating the Financial Crisis.Virginia Law Review, 1405-1481.