Negative Work Environment Can Lead to Fraud

In a previous post we discussed how important it is for management to set the tone at the top related to work ethic and integrity at the office. In addition to their positive examples, another way top executives can influence and even prevent unethical behavior from employees is to create a positive work environment.

If workers have a high morale and feel valued at their place of work, they will want to take care of the company and make it successful. A negative work environment can lead to low morale or loyalty. According to the Association of Certified Fraud Examiners, unhappy employees will be more prone to committing fraud because they feel no obligation to protect the company.

According to the report, “Management Antifraud Programs and Controls: Guidance to Help Prevent, Detect Fraud” from the American Institute of CPAs, these are some of the components that make up a negative work environment:

  • No reward or recognition for appropriate behavior and      job performance
  • Negative feedback
  • Perceived organizational inequities
  • Autocratic rather than participative management
  • Unreasonable budget expectations or other financial      targets
  • Low organizational loyalty
  • Fear of delivering “bad news” to supervisors and/or      management
  • Less-than-competitive compensation
  • Poor training and promotional opportunities
  • Unfair, unequal or unclear organizational      responsibilities
  • Poor communication practices or methods within the      organization

On the flip side, to create a positive environment, management should consider focusing on the following:

  • Recognition and reward systems are in tandem with goals      and results
  • Equal employment opportunities exist
  • Team-oriented, collaborative decision-making policies      are encouraged
  • Compensation and training programs are professionally      administered

Contact us if you have questions on setting the tone at the top for your organization, or if you feel a review of your internal controls and systems is in order.


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