Business Continuity in the Face of Fraud and Organisational Change

Abstract

We examine business continuity in the context of fraud and accounting for an organisation as a going concern. The issues addressed are timely and focus on two points. First, fraudulent activities in business are increasing worldwide with related costs reaching trillions of US dollars. Second, the conventional accounting concept of a going concern that typically signifies business continuity is arguably formed on a static view of business. As such, this view does not help mitigate opportunities for fraudulent statements of account. We contribute to the accounting literature by emphasising the dynamic nature of business and in doing so extend the discussion on Type 1 and Type 2 going concern errors. In that context we provide evidence of a possible Type 3 going concern error in an organisation's financial reporting. Drawing on an international fraud case involving an Indian company, Satyam, we illustrate the adaptive behaviour of resilient business organisations. The findings of our study show that even in the face of fraud dynamic, adaptive organisations can achieve business continuity.

A review of accounting research in Australasia

“…As examples, Barth () reflected on the role of financial accounting research in supporting financial accountability and provides direction for future research, and Dyckman () argued for abandonment of null hypothesis statistical tests. Furthermore, other research areas include topics related to accountants (Clayton and Staden, ) and fraud (Margret and Hoque, ).…”

Effect of Computer Assisted Audit Tools on Corporate Sustainability

“…In order to guarantee businesses' continuity and growth, it is vital to pledge efficient corporate management. However, due to fraud, several businesses fail [31], causing economic, social, and environmental calamities [6]. Considering the harmful effects of fraud, it is also important to notice that firms' investors are also harmed by fraud, which will have repercussions in the loss of confidence of potential investors [32].…”

“…Corporate sustainability, our dependent variable, is proxied by the scope of detection of fraudulent schemes performed by internal auditors in the purchase-to-pay business process (FRAUD). Fraudulent activities can destroy a business and frequently result in economic, social, and environmental calamities [6]. Consequently, fraud affects the ability of organizations to create value for shareholders and other stakeholders, resulting in a threat to organizational sustainability.…”

“…Fraud is one of the main threats to business continuity and frequently culminates in the failure of organizations and economic, social, and environmental calamities [6]. Thus, fraudulent activities undermine the capacity of organizations to become more sustainable.…”

Research Topics in Accounting Fraud in the 21st Century: A State of the Art

“…Margret and Hoque, 2016 [189] It is concluded that the static vision that underlies conventional financial statements is sometimes problematic. A continuous debate about the quality of an organization's published finances is necessary.…”