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Effective Executive Magazine:
Encouraging Ethical Practices and Misconduct Reporting
 
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In the cutting-edge technological environment of robotics, artificial intelligence, big data, blockchain, machine language, etc., the world is embracing change each second and is getting complex day by day. So in order to keep pace with this dynamic world, proper checks and balances in reporting and a robust internal control framework at the organizational level, supplemented with the best ethical practices among the human resources, are essential to the survival and growth of the organization. There are a number of issues that employees face in the organization which becomes a potential bottleneck, holding such reporting which is critical to the organization. As professionals, we need to understand the control environment of the organization for a better understanding of the reporting hurdles and work on the remedies, which we have discussed in this paper.

   
Misconduct by employees can potentially destroy an organizational system and its culture. To minimize this risk, the management typically implements a variety of processes to identify misconduct so that alleged transgressions can be understood, analyzed, and corrected. The most common, often effective, method of getting information about the purported misconduct is to provide people a safe and convenient way to report suspected wrongdoing. Yet, various factors like fear of retaliation, peer pressure and other factors (which will be discussed later in this paper) often deter employees from coming forward.

The anti-fraud collaboration defines financial reporting fraud in its most general sense, as a material misrepresentation in a financial statement resulting from an intentional failure to report financial information in accordance with generally accepted accounting principles.

Key players in the financial reporting supply chainócorporate directors, financial executives, external and internal auditorsófrom around the world discussed issues surrounding reporting suspected fraud and the negative impact of fear of retaliation has on the timely detection of such fraud. Presentations and discussions from this involved the following issues: