In theory, management is responsible not only for designing and implementing strong systems of internal control but also confirming their continued effectiveness over time through monitoring activities. Yet, management override of these monitoring activities — -Soften described as the Achilles' heel of internal controls — is a growing trend at the executive level, as indicated by both of The Committee of Sponsoring Organizations of the Treadway Commission's fraud studies of 1998 and 2010. When the “overseer” becomes the perpetrator of fraud, how do shareholders protect themselves? Indeed, as the Roman satiric poet Decimus Juvenal wrote, “But who will guard the guardians themselves?”
Copyright © 2011, Institute of Internal Auditors
Institute of Internal Auditors
Ramamoorti, Sridhar and Evans, R. Luke, "The Corporate Ethics Audit: To Prevent and Detect Management Fraud, Internal Auditors Must Have a Sound Understanding of Human Behavior" (2011). Accounting Faculty Publications. 92.
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