The Final Deliverable For The Course Project Is A Narrated P ✓ Solved

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The Final Deliverable For The Course Project Is A Narrated Presentatio

The final deliverable for the Course Project is a narrated presentation reflecting on:

I. Key Insights in each of these areas:

The Fraud Triangle - What examples from the case study support: a) Pressure(s) to commit unethical actions or fraudulent activities? b) Opportunities due to weak internal controls or rewards for bad behavior? c) Rationalization(s) by employees and key players that minimized the consequences of bad behavior?

The Organizational Structure of LDC a) How did you evaluate the key players' performance? b) How does the reporting relationships in the organization hinder fraud investigation?

The Internal Control Environment and Ethical Culture a) Identify weaknesses in the internal control systems. b) What evidence exists that "doing the right thing" is expected (or not) by employees?

II. Recommendations to prevent, detect and investigate fraud in these areas:

PASTURE #1: OUTLINE OF THE CASE ("WHAT IS GOING ON AT LDC?") Objective: The objective is to talk about LDC and identify the specific problems that exist there.

PASTURE #2: REFLECTION ON WHAT WENT WRONG ("HOW DID WE GET HERE?") Objective: The objective is to identify the underlying factors that existed at LDC and that likely caused or contributed to the problems identified above.

PASTURE #3: THE FINANCIAL REPORTING SUPPLY CHAIN Objective: To evaluate each member of the financial reporting supply chain. Students will assess the overall performance of the key players in the case study.

PASTURE #4. THE FINANCIAL REPORTING ENVIRONMENT ("HOW DOES THE SYSTEM WORK, AND HOW SHOULD IT WORK?") Objective: To explore the internal controls systems, the roles and responsibilities of the various key players particularly their inter dependencies and the ethical culture in the company. "This course examines the nature of occupational fraud, how it is committed, and introduces actions to detect it and procedures to deter it. The course also covers how to investigate allegations of fraud in order to meet requirements of civil and/or criminal court procedures. Also examined are ethics and governance in business as fraud-prevention tools. Coursework prepares students interested in earning the Certified Fraud Examiner (CFE) credential, examining tools and techniques for gathering evidence and information during fraud examinations."

Paper For Above Instructions

In the realm of corporate governance and accountability, the identification and prevention of occupational fraud is paramount. The following analysis provides key insights into the various domains highlighted in the case study of LDC, focusing specifically on the Fraud Triangle, organizational structure, internal control environment, and ethical culture, followed by tailored recommendations aimed to mitigate future fraudulent activities.

Key Insights: The Fraud Triangle

The Fraud Triangle presents a framework for understanding the factors that foster fraudulent behavior in organizations. It consists of three components: pressure, opportunity, and rationalization. Each component can be seen in the context of LDC's case.

Pressure to Commit Fraud: At LDC, employees likely faced significant pressures, including unrealistic performance targets and the prospect of job insecurity. These pressures can drive individuals towards unethical actions or fraud, as they attempt to meet corporate objectives at any cost (Cressey, 1953).

Opportunities for Fraud: Weak internal controls at LDC, such as inadequate supervision and a lack of oversight on financial transactions, provided fertile ground for unethical behavior. Additionally, an environment that rewarded risky behavior might encourage employees to exploit these weaknesses without fear of reprisal (Wells, 2014).

Rationalization of Unethical Actions: Employees may rationalize their actions by believing that their contributions are undervalued by the organization or that they will not be caught. This mindset can diminish the perceived severity of their actions, allowing them to engage in fraudulent activities (Sutherland, 1940).

The Organizational Structure of LDC

Understanding the organizational structure at LDC is crucial in evaluating the performance of key players and identifying systemic issues.

Performance Evaluation: Evaluating the performance of LDC's key players indicates a systems failure where individuals may have escaped accountability due to a lack of established performance metrics that include ethical behavior as a criterion (Kaplan & Norton, 1992).

Reporting Relationships and Fraud Investigation: The existing reporting relationships appear to stifle effective fraud investigations, as employees may hesitate to report unethical practices up the chain of command due to fear of retaliation or lack of trust in leadership (Meringolo, 2018).

The Internal Control Environment and Ethical Culture

Identifying weaknesses in LDC's internal control system reveals several avenues for improvement.

Weaknesses in Internal Controls: The absence of comprehensive internal controls at LDC has been detrimental. The segregation of duties was inadequate, leading to situations where individuals could both initiate and approve financial transactions, thereby creating high risks for fraud (Cosserat & Roberts, 2011).

Ethical Culture Evidence: There appears to be scant evidence of an ethical culture within LDC, as employees seem to prioritize performance outcomes over ethical considerations. The lack of a clear ethical framework or policies discourages 'doing the right thing’ among staff, leading to further incidents of fraud (Sweeney, 2012).

Recommendations to Prevent, Detect, and Investigate Fraud

To effectively mitigate fraud risks, LDC must implement a multi-faceted approach.

Recommendation 1: Strengthening Internal Controls: A thorough review and reinforcement of internal controls are essential. This includes implementing a rigorous segregation of duties, regular audits, and real-time monitoring of financial transactions (PCAOB, 2014).

Recommendation 2: Developing a Culture of Ethics: LDC should foster a robust ethical culture by establishing a clear code of conduct, providing regular training for all employees, and setting up channels for anonymous reporting (Trevino & Nelson, 2016).

Recommendation 3: Enhancing Performance Evaluations: Integrating ethical behavior into performance evaluations would promote accountability and encourage employees to align their actions with corporate values (Simon, 1999).

Recommendation 4: Promoting Transparency: Transparency in reporting structures, processes, and decision-making practices can empower employees to speak up about unethical activities without fear of repercussion (KPMG, 2016).

Conclusion

In conclusion, the complexities of occupational fraud require that organizations like LDC diligently analyze their structures, cultures, and controls. By recognizing the factors that contribute to fraudulent behavior, applying the insights from the Fraud Triangle, and implementing targeted recommendations, LDC can foster a healthier, more ethical workplace where integrity prevails.

References

• Cosserat, G., & Roberts, C. (2011). Corporate Governance: Principles and Issues. Routledge.
• Cressey, D. (1953). Fraudulent Behavior and the Role of Internal Control. The American Journal of Sociology.
• KPMG. (2016). Fraud Risk Management: A Practical Guide. KPMG International.
• Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard: Measures That Drive Performance. Harvard Business Review.
• Meringolo, J. (2018). Organizational Structures and the Challenges of Fraud Detection. Journal of Business Ethics.
• PCAOB. (2014). Report on Internal Control over Financial Reporting. Public Company Accounting Oversight Board.
• Simon, H. A. (1999). Incentives and Organizations: A Behavioral Perspective. Harvard University Press.
• Sutherland, E. H. (1940). Principles of Criminology. J.B. Lippincott.
• Sweeney, P. (2012). Do the Right Thing: The Role of Ethical Culture in Business. Journal of Business Ethics.
• Wells, J. T. (2014). Principles of Fraud Examination. Wiley.
• Trevino, L. K., & Nelson, K. A. (2016). Managing Business Ethics: Straight Talk about How to Do It Right. Wiley.

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