© D.L. Crumbley
Fraudulent Financial Reporting more likely to occur if
Firm has a poor management control philosophy.
Weak control structures.
Strong motive for engaging in financial statement fraud.
Poor management philosophy:
Large numbers of related party transactions.
Continuing presence of the firm’s founder.
Absence of a long-term institutional investor.
Source: Paul Dunn “Aspect of Management Control Philosophy that contributes to fraudulent Financial Reporting,” Journal of Forensic Accounting, Vol. IV (2003), pp. 35-60