(An ongoing business ethics series)
“Overall, the findings [consistently] showed that ethics instruction has had significant benefits on participants over the last decade, and that the number of participants who benefit from it has increased dramatically. Several specific findings on the subject of instructional effectiveness moderation emerged.” – Business writer/career blogger Rachel Kay, September 15, 2022
As a business ethics keynote speaker, business ethics consultant and book author, I could not agree more with Rachel Kay. Numerous business ethics studies across many industries (from healthcare to insurance sales) consistently show the positive quantitative outcomes of ethics training. However, some industries stand-by their in-house training and professional certifications as do accounting firms.
However, there seems to be a gap between truth and reality. During and after the pandemic, accounting fraud soared. Was it a lack of oversite during virtual times, the lack of ethical education amongst employees, incredibly naïve employees getting taken in by cyber-fraud? Yes, to all three, and many more. While many had dubbed 2021 the year-of-the fraud, 2022 has the potential to be worse.
Facing facts, which is something that as a business ethics keynote speaker, business ethics consultant and book author, I must always do, I note that the accounting fraud did not only occur at fly-by-night organizations but organizations such as FTE Networks, Kraft-Heinz and city governments in Seattle and Los Angeles. A CPA license does not guarantee ethical behavior; ethical training and its reinforcement helps to create an ethical atmosphere.
What can be done to create effective accounting ethics training?
No organization is immune from accounting and financial fraud. The more training that is in place, the greater the likelihood of stopping the occurrence of fraud. However, there are things every accounting department must be aware of on a daily basis. Here are 5 accounting danger areas that must be covered by constant training:
- Awareness of scams. There are numerous resources available to review frauds and scams especially directed at accounting and financial departments. The most effective training programs have monthly or even weekly meetings to review the latest scams.
- Oversite. Are your departmental controls strong enough, or just “good enough?” How does a CFO or other executives manage to skim money from a company? Usually because of a lack of oversite. Especially as we accept the hybrid workplace, how do organizations watch for fraud?
- How’s your encryption? Has the company done enough to protect its digital resources? Who has access and who ensures there is sufficient authentication? Is it possible to steal data? How does/can it happen?
- Is there a reporting structure? If any accounting or financial employee spots irregularities, are policies and procedures in-place to enable that person to report the situation without penalty? While this should be an obvious, it frequently isn’t and has resulted in catastrophe or bullying or illegal termination and retaliation.
- Network surveillance. How is the network being tracked and monitored? And, while I am on this topic, are employees being educated as to internet usage, downloading suspicious email and/or watching for unauthorized data transfers?
Effective accounting ethical training must be monitored and discussed in terms of “outside attacks,” but it must also be examined from potential threats from “the inside.” As a business ethics keynote speaker and business ethics consultant, I well remember an organization where an accounting department employee who had been in place for 18-years was found to have stolen more than $500,000.
How could this have happened right under the noses of the department? Simple. She had been in place for so long, she was “a fixture.” She was never challenged and there was no oversite. More than that, she had never received a serious business ethics review.
What can be done to create effective accounting ethics training? Start with (and demand) ethical behavior.
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