risk-based audit

Corporate fraud: The veil of silence

Dr. Michael-A. Leuthner
Dr. Michael-A. Leuthner

By Dr. Michael-A. Leuthner, CPA

Most people don’t like negative news, therefore people tend to simply sweep the problems under the carpet, and after all they do not wear their hearts on their sleeves. Nobody is interested to peddle on the subject. But see what’s coming next.

Interestingly, after the second article was posted in Germany at www.xing.com, in the first 24 hours it received over 4,500 hits. One reason therefore was also the upcoming of ‘Dieselgate’ with Volkswagen AG. So, there could be the impression that reporting about fraud seems again ‘en vogue’.

This could lead us to the conclusion that neither the company that discovered a fraud is motivated to publish bad news, nor suppliers, customers shall be informed about that incident. Furthermore, creditors shouldn’t be informed after all. Why is that so?