The Relation between Accounting Frauds and Corporate Governance Systems: An Analysis of Recent Scandals
16 Pages Posted: 29 Jan 2008
Date Written: June 2006
Evidence on accounting irregularities and frauds has shown how corporate governance systems in modern economies are far from preventing the risk of misleading financial information.
This paper has the purpose to study the main features of some well-known italian and international accounting frauds, to find some relations between corporate governance rules, control systems, accounting regulation and the frauds themselves.
Deeply, each case of accounting fraud will be analysed through the following grid of main features:
Origin, causes and incentives - Accounting irregularities causes, incentives and effects on firms results; - Purpose and interests pursued with them; Development Process - Time extension of frauds implementation and growth of dimension over time; - People involved in and acknowledged of the fraud; Implementation tools - Voices subject to manipulation and typologies of accounting tools for irregularities implementation; - The attitude of openly violating or just eluding rules and accounting standard. Internal and External controls - External and internal auditors effectiveness and role; - Ownership and management decision-making rules.
The final purpose is to identify the relation between frauds characteristics, economic and legal systems and corporate governance practices in different countries. to highlight the effects of contest variables, regulation and control systems on the genesis and development of accounting fraud.
Keywords: Accounting frauds, corporate governance, control systems
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