Management override
Management override is a common short form of the English term management override of internal controls . In business administration - especially in auditing and internal auditing - it is used to denote the deliberate override of internal control mechanisms by senior employees in a company .
Problem
Studies of white-collar crime repeatedly show that in a large number of cases in companies, executives are the perpetrators. Due to their position of trust and the associated competencies, this group of people is often able to circumvent controls that companies have established in their internal control system. This risk must be taken into account by designing the control environment accordingly.
On the other hand, not every evasion of controls is a crime . In economic life it is also necessary for a successful company to be able to react quickly and flexibly. Formal rules can be an obstacle here. The rules are often many years old and no longer match the current conditions. At most, the rules were also created "in the back room" and therefore unrealistic. In these cases, on the one hand, the deliberate violation of rules must be made transparent and, on the other hand, the rules themselves must be continuously adapted to reality.
Precautions for Prevention
The American Institute of Certified Public Accountants (AICPA) , together with other organizations, has created guidelines that are intended to support supervisory boards and their audit committees in designing the control environment.
It is not only important to prevent fraud and embezzlement , but also the manipulation of financial reporting ( falsification of the balance sheet ). Such manipulations partly serve to cover up criminal offenses, but also management errors and, moreover, the fundamentals of incentive systems are falsified by beneficiaries of such systems.
Individual evidence
- ↑ z. E.g .: KPMG Deutsche Treuhand-Gesellschaft (ed.), '' Profile of a Fraudster, Study 2007 '', 2007
literature
- American Institute of Certified Public Accountants (AICPA) (Ed.): Management override of internal controls: The Achilles' Heel of Fraud Prevention . New York 2005 online English (PDF; 177 kB)