Question

the Cadbury report on corporate governance contains the following statement: had a code such as ours been and intense in the past we believe that the number of recent examples of unexpected company failures in cases of fraud would have received attention earlier it must however be recognized Atmos system of control and eliminate the risk of a fraud without so shackling companies as to impede their ability to compete in the market place. Do you agree with this statement? if good governance wont completely prevent fraudulent behavior, what will?

Answer 1

When any Organization attempts to create a strong ethical atmosphere in the culture of the Organization, somewhere the personal ethics of the employees also have an influence over the same. Ethical values could be guided to the employees but in terms of implementation within the Organization’s environment, there needs to be a definite code of ethics in place, apart from Corporate Governance. This is the only way, ethics change into guiding rules for the employees to undertake only those official activities in the Organization that are deemed to be ethical in nature. In this manner, if not goo Corporate Governance, at least Code of ethics may help to make the employee more righteous in their approach and influence them to behave in a certain desirable manner, therefore attempting to prevent fraud.