How senior managers perpetuate accounting fraud? Lessons for fraud examiners from an instructional case

Lokanan, Mark (2014) How senior managers perpetuate accounting fraud? Lessons for fraud examiners from an instructional case. Journal of Financial Crime, 21 (4). pp. 411-423. ISSN 1359-0790

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Abstract

Purpose
The purpose of this paper is to examine the risk factors that led to the Livent fraud, and the procedures that need to be taken by responsible parties to carefully investigate and address the incidents of misconduct.

Design/methodology/approach
The paper combs through the chronology of events that led to the Livent fraud by looking at both primary and secondary sources. These sources made it possible to examine how the fraud was discovered, and the investigative steps that should have been taken to uncover the fraud.

Findings
The findings indicate that a corporate culture which focuses on the bottom line coupled with weak to non-existent internal controls were the key elements that led to the Livent fraud. The findings also illustrate that when faced with declining profits, senior managers will go to any length possible to manipulate and falsify their company’s records.

Practical implications
The paper is useful to management personnel and fraud examiners in that it used an actual accounting fraud case to highlight areas more susceptible to fraud and the approach that can be taken to investigate similar cases of misconduct. The paper also highlighted the practical implications for internal and external auditors in detecting and addressing fraud.

Originality/value
The study used an accounting fraud case to examine the techniques used by management personnel to produce fraudulent financial statement.

Item Type:	Article
Uncontrolled Keywords:	auditors, contingency plan, forensic accounting, fraud, investigation, livent
Subjects:	N300 Finance
Department:	Faculties > Business and Law > Newcastle Business School
Depositing User:	Users 6424 not found.
Date Deposited:	11 Dec 2014 15:05
Last Modified:	19 Nov 2019 09:50
URI:	http://nrl.northumbria.ac.uk/id/eprint/18476

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