Case 14 You are the owner of a privately owned, moderatesized company. The business was founded over 20 years ago and has experienced impressive growth and profitability. The only frustrating thing, however, is that you know the company’s profits would be significantly higher if you could rid it of its problems with fraud. Your accountants estimate that the company has lost approximately 7 percent of its earnings to fraud over the past five years. The company has adequate controls in place, and you try to ensure that people don’t override them. Since you are the owner, however, you often bypass some controls. You know that you aren’t out to rob the company, so you believe that the controls aren’t applicable to you. You try to keep a close eye on most aspects of the business, but with about 500 employees, it’s difficult to know about everything that is going on. Employees have been caught in fraudulent activities in the past, but you have never bothered prosecuting them. You wish to avoid the negative publicity that would result, and you see no valid reason to publicly humiliate former employees—their shame won’t bring back the money they’ve stolen. What aspects of the company can you change in order to reduce the amount of fraud that is occurring? Use the five factors described in the chapter relating to creating a culture of honesty, openness, and assistance to explain your answer.

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