The Effectiveness of Internal Control Systems in Preventing Financial Fraud: A Case Study of Multinational Corporations

This case study examines the effectiveness of internal control systems (ICS) in preventing financial fraud, with a focus on the Volkswagen (VW) emissions scandal known as ‘Dieselgate’. This paper discusses the internal control problems reflected in this case, including a series of problems such as insufficient division of labor, insufficient supervision, insufficient communication and imperfect approval. These deficiencies allowed the fraud to continue for nearly a decade, resulting in significant financial penalties and reputational damage, reflecting the role of internal control failures in asserting financial fraud. As a result, the study highlights the importance of cultivating an ethical corporate culture, strengthening risk management and ensuring strong internal controls to prevent similar incidents in multinational companies.

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Publication Details

Journal
Economics & Management Information
Published
2024-10-18
DOI
https://doi.org/10.62836/emi.v3i4.231
Citations
1
Primary Topic
Banking, Crisis Management, COVID-19 Impact
Type
article
Field-Weighted Citation Impact
1.34
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article

The Effectiveness of Internal Control Systems in Preventing Financial Fraud: A Case Study of Multinational Corporations

Xinyan Ding
1 citations
Economics & Management Information
Banking, Crisis Management, COVID-19 Impact
1.34
article

The Effectiveness of Internal Control Systems in Preventing Financial Fraud: A Case Study of Multinational Corporations

Xinyan Ding
article en
1 citations

Abstract

This case study examines the effectiveness of internal control systems (ICS) in preventing financial fraud, with a focus on the Volkswagen (VW) emissions scandal known as ‘Dieselgate’. This paper discusses the internal control problems reflected in this case, including a series of problems such as insufficient division of labor, insufficient supervision, insufficient communication and imperfect approval. These deficiencies allowed the fraud to continue for nearly a decade, resulting in significant financial penalties and reputational damage, reflecting the role of internal control failures in asserting financial fraud. As a result, the study highlights the importance of cultivating an ethical corporate culture, strengthening risk management and ensuring strong internal controls to prevent similar incidents in multinational companies.

Economics & Management Information
Jimei University (CN)
Decent work and economic growth
Openalex Percentile: Top 13%
Banking, Crisis Management, COVID-19 Impact
1.34
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