Since we are alone and nobody is looking I’ll just ask you—have you lied, or broken any rules, this week? Ok, I’ll assume you’re answer is the same as mine—especially if we drive the same way. And do you consider yourself a good, honest and moral person? I’m guessing our answers are still the same. So how do people who get caught up in the massive frauds and scandals you read about cross that line? Most don’t wake up, stretch and say “yep, today I’m going to crash the housing and mortgage industries”—it is a gradual process. Yet there is ultimately one reason financial crime perpetuates, which we can identify on our good friend, the Fraud Triangle—this reason is rationalization. What’s the big deal? Everybody’s doing it. It’s socially acceptable (cheating ‘a bit’ on taxes maybe?). It’s for the greater good. It’s only temporary and I’ll true it up next month. The reality is that the human mind develops a tolerance to lying and cheating—much like the body does for drugs. After a while it just doesn’t have the same effect anymore.
Common Lying in Business:
- ‘Fibbing’ on Resumes. Lying begins at the ground floor as well as up the corporate ladder.
- Lying about degrees earned…and even the school attended itself
- Padding the grade-point average
- Falsifying school or previous employment dates
- Misrepresenting technical skills, abilities and experience
- Inflating previous titles or job descriptions
- Deceptiveness about a prior record (driving, criminal, etc.)
- Hitting the Numbers. Most jobs have pressure to reach or achieve certain levels or marks—such as sales, production or customer service satisfaction numbers. This is ultimately how we are evaluated, or how we measure others’ efforts and effectiveness. Why do falsifications occur?
- Financial gain, bonus, reward
- Admiration of others
- False sense of importance
- Promotion and advancement
- Avoid punishment or embarrassment
- Retain employment
- Control. We have all heard that knowledge is power. Indeed it is,especially when it comes to business dealings, and that knowledge is either used, falsified or concealed.
- Withholding information in a negotiation or contract
- Neglecting to notify or pass on critical information to a competitor
- Corporate espionage
- Threatening a co-worker, employee or employer with false information
And to think these are just issues in the business world regarding lies and deception that haven’t even scratched the surface of fraudulent transactions, theft or falsified financial statements. All types of damage can be done through the above methods without ever embezzling a single dollar.
Rather than feeling overly vulnerable to the potential for loss, use this information to empower yourself in business. Encourage your HR department, managers or yourself to develop skills to spot lies. Deception-detecting interview techniques for new hires, in addition to criminal (and financial) background checks, are great ways to mitigate risk and reduce the potential of someone inflicting serious pain to your business. Don’t let a little white lie permeate deception throughout business.
Author: Richard C. Gordon, CPA/ABV/CFF, CFE, CGMA, Director of Forensic and Valuation Services