Institute, others issue antifraud guide for businesses. (Highlights).

The AICPA joined six other professional associations in offering boards of directors, audit committees and corporate managers practical advice on preventing and detecting malfeasance ranging from unproductive behavior and minor theft to misappropriation of assets and falsified financial statements. This effort coincides with the ASB's recent issuance of SAS no. 99, Consideration of Fraud in a Financial Statement Audit (see "Auditors' Responsibility for Fraud Detection," page 28, and Official Releases, page 105), which is the cornerstone of the Institute's comprehensive antifraud and corporate responsibility program. A new Antifraud Resource Center (www.aicpa.org/antifraud) on the AICPA Web site contains tools, information and support to help practitioners spot and thwart fraud.

The seven associations presented their recommendations in a document titled Management Antifraud Programs and Controls (www.aicpa.org/antifraud/management) that the AICPA appended to SAS no. 99 as an exhibit. In their view businesses that implement three key practices will improve their ability to conserve revenue, enhance their market value, avert civil lawsuits and maintain a positive corporate image.

* Create a culture of honesty and high ethics. As role models for other employees' behavior, directors and officers have a unique capability to promote policies that represent all stakeholders' interests. The recommendations therefore focus on how senior managers can fulfill this responsibility. One way, for example, is to clearly communicate to employees management's desire to achieve its strategic goals, but not at the expense of truthful financial reporting.

* Evaluate antifraud processes and controls. Employees seldom engage in fraudulent financial reporting or misappropriate assets without thinking they can commit and conceal such fraud or their part in it. Organizations therefore should identify and measure fraud risks, take steps to mitigate them and implement and monitor effective internal controls that discourage and detect wrongdoing.

* Develop an appropriate oversight process. While management and internal auditors play important roles in fraud prevention and detection, the recommendations stress the audit committee's role in the company's antifraud activity. For example, it should evaluate management's identification of fraud risks, implementation of antifraud measures and approach to fraud prevention and detection. The audit committee also should ensure senior management establishes antifraud measures to protect investors, employees and other stakeholders and it should help the board of directors meet its responsibility to oversee the company's financial reporting procedures and internal control system.

Working with the Institute to develop the recommendations were the Association of Certified Fraud Examiners, Financial Executives International, the Information Systems Audit and Control Association, the Institute of Internal Auditors, the Institute of Management Accountants and the Society for Human Resource Management. The American Accounting Association, the Defense Industry Initiative on Business Ethics and Conduct and the National Association of Corporate Directors also participated in the effort.