Auditing for Racism, Sexual Harassment and Fraud Proclivity, Proposed Models to Use to Help Avoid Discrimination Mega Losses

• In Event: Research in Auditing

Abstract

With increased awareness of sexual harassment issues and racist tweets, in a matter of seconds, an organizational member can make a discriminatory internet statement that can cost the future of a very successful endeavor and many millions of dollars. We propose integrating the most recent interdisciplinary research on Social Dominance Orientation (SDO), and both the Dark Triad (D3) and the Dark Tetrad (D4) to better understand and predict various forms of sexual harassment and racism while fighting fraud in organizations. Auditing standards dictate that auditors consider the attitudes of management toward fraud when making fraud risk assessments. We utilize the most recent research on D4 and the validated HEXACO model, which can be audited for using organizational emails, interviews, short personality tests, ethics codes and performance appraisals. We propose a model of three dyads underscored by a bipolar dimension ranging from low to high fraud risk. We use the HEXACO Honesty-Humility (H) dimension which is a strong predictor for whistleblowing. We combine this with the HEXACO Agreeableness (A) dimension to form the Altruism (AL) extension dimension, because employees high on AL are more likely to refrain from supporting fraud and are more likely to report it. We propose research based models that accountants can use while auditing to facilitate a culture of lower discrimination and sexual harassment. They and consultants can help develop organizational citizenship behaviors to counter the culture of discrimination and high fraud risk engendered by the D3, D4 and SDO. Our proposed models can both explain extremely costly discrimination, anti-egalitarianism, and white-collar criminal contagion. Audits of people’s SDO levels at hiring can help foster employment law compliance and organizational sustainability.

Authors

• Jana Wilhelm, University of Kentucky

• Paul Wilhelm, University of Kentucky