Climate For Scandal : Corporate Environments

1895 Words Jul 4th, 2016 8 Pages
1. Title: Climate for Scandal: Corporate Environments that Contribute to Accounting Fraud
(Crutchley & Marshall, 2007) studied Climate scandal that corporate environment contribute to the accounting frauds are not .therefore they have select the 97 firms that are under investigation in security and exchange commission for accounting fraud. They consider the corporate environment including board member, auditors, auditor committee etc. however it is observed that if there are more internal auditor on the audit committee and outside directors are limited in company than that company has more chances to accused of fraud instead of the company that has more external auditors and board member. moreover it is also concluded that companies that have smooth earning and profitability in previous years and less earning in current years can lead to accounting scandals, because to show the smoothness in company or business profitability or growth that business have more chances to use the fraud accounting practices and to show more according to the need of the organization. Moreover they concluded that corporate environment is very much important in business and corporate environment can lead to the accounting scandals and frauds. Therefore weak corporate governance and poor corporate environment also caused to the accounting scandals.
However they summarized their article as firms that are involved in accounting scandals and frauds are characterized by the high earning smoothing and…
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