Optimization of Compliance and Mitigation of Accounting Frauds in American Organizations

Abstract

It is through fraudulent accounting records that organizations’ annual results invariably lead directors and stakeholders to substantial losses, if not bankruptcy. The literature shows that financial frauds result from improper accounting entries, stemming from the bad intentions and greed of corrupt individuals in top management positions in various businesses. These individuals choose to engage in conduct that harms entire groups composed of companies, workers, and investors, affecting their credibility and integrity in their industry and also impacting professionals in the fields of accounting and auditing. In order to prevent financial frauds, organizations must take preventive measures by adopting good practices in Corporate Governance through the implementation of effective compliance actions, establishing specific and effective objectives among internal controls, and avoiding risks and accounting practices that may negatively impact the organizations. This original article, prepared through bibliographic research, aims to demonstrate that compliance actions contribute to the mitigation of fraud when properly applied in administrative and organizational processes. As a result, it was found that adopting compliance measures within the organizational system is not enough without regular verification of its effectiveness by administrators and managers.