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Corporate Social Responsibility Enhanced Control Systems Reducing the Likelihood of Fraud

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Abstract

All kinds of fraud are costly for the people engrossed both financially and often in terms of the time needed to clear their name when illegal use has been made of their personal details. The relationship among ethics, internal control, and fraud is important in the understanding of corporate social responsibility (CSR). This article uses an Ethical Process Throughput Model embedded in the Fraud triangle in order to better understand the interconnectedness of ethical positions and internal control systems that handle fraudulent situations. Ethical positions are utilized to underscore how ethical behavioral control systems can be appropriately applied, which can provide unparalleled security, enhanced convenience, heightened accountability, better fraud detection and is very effective in depressing fraud, thereby improving CSR among organizations.

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Notes

  1. The legal meaning of fraud is comparable regardless, if the offense is criminal or civil. The difference is that criminal cases must meet a higher burden of proof.

  2. Rodgers (1997, 2006) argued that perception represents a person’s expertise, classifying, and categorization of information. For example, an individual effectively implementing cognitive heuristics (Kahneman and Tversky 1982) of talking about and delivering products to customers when other potential customers are in the same vicinity thereby influencing future sales.

  3. The EPTM approach (Rodgers 1997) has been used in several contexts such as organizations (Rodgers and Gago 2001; Foss and Rodgers 2011), auditing (Rodgers et al. 2009), education (Rodgers et al. 2007), and financial markets (Rodgers et al. 2013).

  4. Internal control is defined as a process affected by an organization’s structure, work and authority flows, people and systems, implemented to assist an organization to accomplish specific goals and objectives (COSO 1999).

  5. Although, Cardwell (1960) maintained that the repeat offender is not influence by pressure and/or rationalization. Moreover, Dorminey et al. (2012) advocate that the repeat offender (or predator) replaces the fraud triangle’s antecedents of pressure and rationalization with arrogance and a criminal mindset, respectively.

  6. Although, it is important to note that other pathways in the described decision-making model also contribute to the above ethical positions but in a minor way. As discussed in Rodgers (2009), the corresponding pathway to each particular ethical view is the most dominant (Table 1).

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Acknowledgments

This study was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2012-S1A3A2-2012S1A3A2033412). Andres Guiral acknowledges financial contribution from the Spanish Ministry of Innovation and Science (research projects SEJ2004-00791ECON, SEJ2007-62215/ECON/FEDER, SEJ 2006-14021, ECO2010-17463 ECON-FEDER).

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Authors and Affiliations

  1. University of Hull, Hull, UK

    Waymond Rodgers

  2. University of Texas, El Paso, TX, USA

    Waymond Rodgers

  3. School of Business, University of Halmstad, Halmstad, Sweden

    Arne Söderbom

  4. Yonsei University, Seoul, Korea

    Andrés Guiral

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  1. Waymond Rodgers
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  2. Arne Söderbom
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  3. Andrés Guiral
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Correspondence to Andrés Guiral.

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Rodgers, W., Söderbom, A. & Guiral, A. Corporate Social Responsibility Enhanced Control Systems Reducing the Likelihood of Fraud. J Bus Ethics 131, 871–882 (2015). https://doi.org/10.1007/s10551-014-2152-5

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