Classical Fraud Theory
People continually commit wrong choices, regardless of the fact that they are not aware. Through Albrecht, Holland, Malagueño, Dolan, and Tzafrir’s (2015) study, there are five reasons for manipulating a financial statement. These five reasons include a desire for a reward or benefit, fear of punishment, personal knowledge, obedience to authority, and personal relationship needs. Albrecht et al.’s (2015) five reasons, based upon the Classical Fraud Theory, involves three elements: opportunity, threat, and rationalization. Due to one of these elements, people may make unethical decisions. Though through habitual rituals, people may overlook the wrongfulness and proceed.
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...ons to strengthen their internal control through corporate social responsibility that complies with Sarbanes-Oxley 2002 (Bova, Minutti-Meza, Richardson, & Vyas, 2014).
Society expects organizations to comply with social responsibility, otherwise, calamity will befall in the organization. Thus, many organizations will conduct business in an ethical manner (Drucker, 1981). These organizations are socially responsible if they partake in performing duties that will benefit the humanity. Any unethical mistake can tarnish the company’s reputation. The occurrence of these types of problems results from corporate negligence on the social responsibility and other regulations. This paper aims at providing a theoretical perspective on strengthening corporate internal control by incorporating corporate social responsibilities that comply with the Sarbanes-Oxley 2002.
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