Accountants’ Perceptions of the Relationships among Organizational Culture, Ethics, and Fraud Risk

• In Event: Speaking of Management Issues…

Abstract

2
Accountants’ Perceptions of the Relationships among
Organizational Culture, Ethics, and Fraud Risk
Abstract
Organizational culture (OC) helps to prevent and report financial fraud. Extensive
guidance exists on control functions of OC in this regard (e.g., COSO 2013). In light of related
research in accounting and other disciplines, we investigate whether accounting practitioners
concur with this guidance. We are the first to examine the views of accountants regarding their
experiences with OC in a more general business context. The views our sample’s participants of
137 accountants were consistent with guidance and relevant research, and do not suggest any
obvious limitations of OC as a control against fraud. We also found that older accountants
believed more strongly than millennials that the latter are more likely than themselves to commit
fraud. However the generations did not differ on how millennials’ values may contribute to
fraud. Unexpectedly, the results were consistent across various demographic groups, including
age, gender, and experience.
A different conclusion emerges from our regression analysis, where accountants’
perceptions of how OC affects fraud was the dependent variable and ratings of the ten other OC
characteristics were the independent variables. Variables involving ethical values had significant
coefficients, but most concerning, organizational procedures did not, and again the results were
consistent across demographic groups. We thus conclude that practitioners learn early in their
careers, and continue to believe, that ethical values dominate “soft” organizational controls in
importance. This is a concern for control frameworks (e.g., COSO) that emphasize the role of
culture-oriented controls in preventing and detecting fraud.

Author

• Alan Reinstein, Wayne State University