The average person can name several corporate scandals off the top of their head. Once a fraud scandal becomes a household name, the victim organization may never recover from the damage to its reputation. The effects are far-reaching: employees, investors, creditors, vendors, customers and the community are among those who can suffer tremendously from fraud. The pervasive threat of corporate malfeasance indicates companies need to seriously consider whether they have effective systems in place to prevent such scandals.
One of the biggest challenges in implementing a corporate governance system is that some companies, especially smaller organizations, don’t see any reason to change the status quo. This “if it ain’t broke, don’t fix it” attitude toward fraud prevention can be dangerous. Managers who exhibit this attitude aren’t concerned about fraud simply because they haven’t suffered from it yet.
Many corporate governance programs are born from a crisis. But it is critical not to wait until disaster strikes at your organization to begin implementing an effective corporate governance system. While establishing preventive measures might seem burdensome, they are vital to the success, reputation and longevity of your company. If you have not instituted a whistleblower hotline such as Red Flag Reporting, don’t wait until it is too late. Contact David Lingler at Cassady Schiller regarding instituting Red Flag Reporting at your company……now.
Read more about Corporate Fraud Prevention from David in the Cincinnati Business Journal.