Is accountability a double-edged sword? Experimental evidence on the effectiveness of internal controls to prevent fraud

Details

Serval ID
serval:BIB_830C05385E11
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Is accountability a double-edged sword? Experimental evidence on the effectiveness of internal controls to prevent fraud
Journal
Journal of Management Control
Author(s)
Hoos F., Bollmann G.
ISSN
2191-4761 (Print)
2191-477X (Electronic)
Publication state
Published
Issued date
2012
Peer-reviewed
Oui
Volume
23
Pages
115-132
Language
english
Abstract
Recent legislations oblige organizations to monitor the effectiveness of internal control mechanisms that are necessary to prevent fraud. However, little is known about the effectiveness of different internal controls. We investigate whether the duty to sign work results-one of the most prominent internal control mechanisms-is effective to prevent fraud under different superior instructions. We use a 2×2 between-subjects experimental design with accountability (duty to sign work results vs. no duty to sign) and superior instructions (with vs. without profit maximization cue) as independent variables. Both manipulations of superior instructions reminded people to respect accounting standards and principles but in one condition, an instruction to increase revenues was integrated as profit maximization cue. We expected this cue to trigger a profit maximization decision frame that increases the likelihood for fraudulent revenue recording. 58 managers from an executive MBA class participated in the experiment. We find that superior instructions interact with accountability. Fraudulent revenue recording was particularly observed when people received instructions to increase revenues and had to sign their work results. Consequently, fraudulent behavior can occur without pressure to commit fraud due to profit maximization cues that are communicated by a superior and despite implemented internal control mechanisms. We discuss possible implications of our results for the prevention of fraudulent behavior.
Keywords
Fraud · Accountability · Obedience · Internal audit · Internal controls · Effectiveness
Create date
24/07/2012 9:19
Last modification date
20/08/2019 15:43
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