Home > Uncategorized > Is Corporate Fraud Rampant – One U.S. Attorney’s View and Recommendations

Is Corporate Fraud Rampant – One U.S. Attorney’s View and Recommendations

August 11, 2012

An interesting read – article by Preet Bharara, United States Attorney for the Southern District of New York – for article Click Here.

To a significant extent we have a voluntary legal system that works because the significant majority of people believe in the system and go about their business and daily living in compliance with the law and in consideration of other people, without which the success of the system would be tested.  Of necessity the system is based on an overall common or somewhat common or similar understanding of right and wrong, and a desire to do right.

Bharara’s discussion reminds me of similar discussions within corporate accounting and auditing: at one time, not too long ago, generally accepted auditing standards and generally accepted accounting principles were significantly based on broad standards and principles, in addition to more detailed specific procedures and rules on an as needed basis.  Over time, as incidents occurred and to cure perceived deficiencies additional detailed specific procedures, rules and pronouncements were enacted.  Eventually as detailed specific pronouncements continued to increase, the broad standards and principles came to be overshadowed by the specific, with at least some people adopting the approach that if an action wasn’t specifically prohibited by the wording of a specific pronouncement then it must be acceptable.

Integrity and ethics are or at least used to be principles of corporate and daily living conduct and I believe they still are.  I cannot say if Bharara is correct, or if his view overstates the situation.  But it is safe to say that the voices of people and organizations with stature within the corporate community need to be continually heard on message so that integrity and ethics remain or return as the expected conduct.

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