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June 21, 2005

The Cheating Culture

Amey Stone

I attended an accounting conference on fighting fraud yesterday. The lunch speaker was David Callahan, author of The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead.
(You can learn more about the book and Callahan's research at www.cheatingculture.com).

Callahan talked about an epidemic of cheating in this country -- not just in corporate boardrooms, but also in classrooms, sports fields, and -- dare I say it -- news rooms.

Callahan, who surveyed thousands of Americans to come up with his findings, believes pressures to get ahead are increasing on individuals to the point where they can rationalize that it is okay to cut corners (a.k.a. cheat). Jason Blair can make up great quotes, a CFO can adjust financial numbers, or a baseball player can take steroids.

Traditionally forensic accountants have looked for wrongdoing using what's known as the "fraud triangle." That means when an individual commits fraud he or she typically has the opportunity, is struggling with financial pressures, and is able to rationalize it in some way.

Callahan's work suggests that cultural changes have created an easy rationalization available to everyone which is, "Everybody is doing it." In a 2004 article in the Journal of Forensic Accounting, he shared at the conference, Callahan writes:

Norms may arise within an organization that give implicit permission for unethical misconduct. A cheating culture exists when enough people are breaking the rules that there is a perception that "everybody" is corrupt and there is no clear imperative for ethical behavior. In extreme instances, there may be the belief that one cannot be competitive by following formal rules and that cheating is the key to success.

Food for thought.

11:44 AM

Economics

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The referenced article is titled "Rational Cheating: Everybody's Doing It," and appeared in the December 2004 issue of the Journal of Forensic Accounting. The abstract may be found at: http://www.rtedwards.com/journals/JFA/V-2/575.pdf

Posted by: Chris Wade at June 21, 2005 03:30 PM

And just when you think you've heard it all, you find out that there are financial predators getting more creative than ever. The mortgage industry offers a good example of this:
http://therealtygram.typepad.com/realtygram_blogger/2005/06/mortgage_lender.html

Posted by: Frances Flynn Thorsen at July 1, 2005 03:16 PM

Thats incredible

Posted by: Callahan real estate at August 24, 2005 11:55 PM

The govt. cheats its' people--gives billions to fraudulent car companies, insurance companies, Wall Street scumbags--where is the AVERAGE person's help from their govt.--a 500 dollar tax rebate???? What a JOKE--that is why people cheat, cut corners, whatever, the USA money/work game is rigged--the ONLY way to get ahead is to manipulate the system. Doctors, lawyers, CPAs, all cheat. Wake up, caffe latte time.

Posted by: Tommy D. at January 6, 2009 03:30 PM

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