Final answer:
The "tone at the top" refers to the ethical environment created by leaders in an organization, emphasizing the importance of establishing a culture of ethical behavior and integrity to combat fraud, as opposed to merely focusing on procedural changes like complex accounting systems or increased surveillance. b) Establishing a culture of ethical behavior and integrity.
Step-by-step explanation:
The concept of "tone at the top" is an important element in fighting fraud within organizations. It refers to the ethical environment that is created by the company's leaders and how their actions and attitudes toward ethics and compliance can influence the entire workforce. When leaders consistently act with integrity and uphold ethical standards, they establish a culture that encourages similar behavior throughout the organization. This approach is vastly different from options such as implementing complex accounting systems, increasing employee surveillance, or outsourcing internal audit functions, which are more procedural and less about shaping organizational culture.
The role of the board of directors, auditing firms, and outside investors are crucial in corporate governance and oversight. However, significant corporate scandals like those involving Enron and Lehman Brothers highlight failures in these governance structures. These events led to the creation of regulations like the Sarbanes-Oxley Act in 2002, aimed at increasing confidence in the financial information provided by public corporations and protecting investors from accounting fraud. A strong tone at the top ensures that ethical decision-making filters down through all levels of the organization and complements these external mechanisms of oversight.
It is evident that a comprehensive approach to preventing fraud must include both a robust internal culture of integrity, led by example from the top executives, and adherence to external governance and regulatory measures. Ultimately, the aspect of corporate culture that aligns with the concept of the tone at the top is b) Establishing a culture of ethical behavior and integrity.