Essay Effectiveness Of Strengthening Corporate Internal Control

Essay Effectiveness Of Strengthening Corporate Internal Control

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In today’s society, corporations are expected to be socially responsible. Drucker (1981) stated that this is a growing trend or chic for businesses to conduct in an ethical manner. 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 audience associates the reputation in making various choices, such as investment, career, and relation. The major issues that have resulted to the downfall of corporations and financial institutions include fraud, suspicious business valuation, money laundering, post-acquisition disputes and corporate economic damage caused by the breach of contracts and torts (Silverstone & Sheetz, 2012). The occurrence of these problems results from corporate negligence on the social responsibility and other regulations. This paper aims at evaluating the effectiveness of strengthening corporate internal control by incorporating corporate social responsibilities that comply with the Sarbanes-Oxley 2002.
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.
Any...


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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).
Summary
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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