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Business Continuity in the Face of Fraud and Organisational Change

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  • Julie Margret
  • Zahirul Hoque

Abstract

type="main"> 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.

Suggested Citation

  • Julie Margret & Zahirul Hoque, 2016. "Business Continuity in the Face of Fraud and Organisational Change," Australian Accounting Review, CPA Australia, vol. 26(1), pages 21-33, March.
    • Handle: RePEc:bla:ausact:v:26:y:2016:i:1:p:21-33
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    File URL: http://hdl.handle.net/10.1111/auar.12079
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    References listed on IDEAS

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    1. Tom Tuttle & John Heap, 2008. "Green productivity: moving the agenda," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 57(1), pages 93-106, January.
    2. Tucker, Robert R. & Matsumura, Ella Mae & Subramanyam, K. R., 2003. "Going-concern judgments: An experimental test of the self-fulfilling prophecy and forecast accuracy," Journal of Accounting and Public Policy, Elsevier, vol. 22(5), pages 401-432.
    3. Graeme Dean & Frank Clarke & Julie Margret, 2008. "Solvency Solecisms: Corporate Officers' Problematic Perceptions," Australian Accounting Review, CPA Australia, vol. 18(1), pages 71-80, March.
    4. Barnes, Paul, 2004. "The auditor's going concern decision and Types I and II errors: The Coase Theorem, transaction costs, bargaining power and attempts to mislead," Journal of Accounting and Public Policy, Elsevier, vol. 23(6), pages 415-440.
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    Cited by:

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