Question

Accounting Information System Chapter 5:

Do you agree that high penalty, such as reducing salaries or retirement benefits, is the most effective way to reduce employee fraud because the cost of dishonesty is excessive?

Answer 1

I agree on the stringent penalties to be the most effective approach for the reduction on the employee fraud. The manipulations often allows the involved people to benefit from high valuation, inflated stock prices, rise in salaries, or other benefits in the wrongful approach. The shareholders, the investors, the creditors, and other honest employees become the victim of any such fraudulent act; thus it is important that any violation should be dealt strictly. The fraudulent behaviour should be addressed with the high penalty so that it becomes a strong signal for other employees on the wrong doings and winning the confidence of the stakeholders.