Rationalization: This occurs when the violator develops a justification for their fraudulent activities. Adam Smith explains why supply and demand are matched efficiently together within a market. Coase explains why companies still occur. When the costs of using the price mechanism exceed the coordination costs for performing activities yourself, activities will take place within the company. Williamson identifies three critical dimensions that influence the emergence of firms: uncertainty, frequency and specifity. In the view of Coase an entity can be seen as a system, as defined by Bertalanffy in his general system theory, because it is a set of elements standing in interrelation among themselves and with the environment. The transaction cost theory of Williamson fits in the hierarchy of systems as developed by Boulding, in response to the work of Bertalanffy. As uncertainty, frequency and specifity will increase the complexity of the system increases. The work of Smith, Coase and Williamson shows that companies exist to achieve an objective. Implicitly it can be seen from their theories that this objective is profit maximization because it serves self-interest the most. A company can thus be characterized as a system that pursues an objective. Alchian and Demsetz see an organization as a form of team production. This leads to the danger of shirking so that the overall production of the team will be reduced. Employees must be monitored in order to prevent this. Jensen and Meckling identify a conflicting between the owners and management of a company. To do act the agent in the interest of the principal agency costs will be made. Cressey stated that trusted persons become violators when three dimensions occur: pressure, opportunity and rationalization. The work of Alchian and Demsetz and Jensen and Meckling show that conflicts of interest between the residual claimant (principal) and the employees of an organization (agent) could cause that the objective is not fully achieved by the company.
coefficient = ,254, sig. = ,148) and between ‘authorization and approvals’ and ‘safeguarding of assets and data’ (correlation coefficient = ,325, sig. = 0,59). Although these variables also show a positive correlation, these correlations are not significant. In view of the small importance of the non-significant correlations (2 out of 15) and the fact that these correlations, although not significant, are positive, at the significance level of 0,05 H0 is rejected and H1 is accepted. Regarding the use of hard controls within small and medium sized entities, these results mean that there is a positive significant correlation between the use of the different types of hard controls within SME’s. The more one type of hard control is used, the more the other types of hard controls are used. H0: The presence of the different types of hard controls does not differ. H1: The presence of the different types of hard controls differs . The results show that the different types of hard controls can be ranked on the basis of the extent to which they are assumed to be present. This ranking is as follows, from most present to least present: ‘verifications and reconciliations’, ‘authorization and approvals’, ‘primary registrations’, ‘segregation of duties’, safeguarding of data and assets’ and ‘description of procedures’. However, the significance of this ranking is ,211, which means that at the significance level of 0,05 H0 is not rejected and H1 is not accepted. Regarding the use of hard controls within small and medium sized entities, these results mean that the presence of the different types of hard controls does not differ. The results of the statistic analyses with regard to hypotheses 5.1 and 5.2 are included in appendix 2, output tables 7 and 8. H0: The presence of the different types of soft controls is not positively correlated. H1: The presence of the different types of soft controls is positively correlated. The results show that all the correlation coefficients of the correlations between the different types of soft controls shows reasonable to strong positive significant correlations (correlation coefficients between ,365 and ,756, sig. between ,000 and 0,044), except the correlation between ‘sanctionability’ and ‘discussability’ (correlation coefficient = ,296, sig. = ,0,82). Although these
Sig. (2-tailed) ,832 N 25 Output table 5: Segregation of duties Primairy registrations Description of procedures Authorization and approvals Verifications and reconciliations Safeguarding of data and assets Segregation of duties Correlation Coefficient 1,000 Sig. (2-tailed) . N 25 Primairy registrations Correlation Coefficient ,421* 1,000 Sig. (2-tailed) ,017 . N 25 25 Description of procedures Correlation Coefficient ,578** ,254 1,000 Sig. (2-tailed) ,001 ,148 . N 25 25 25 Authorization and approvals Correlation Coefficient ,818** ,397* ,548** 1,000 Sig. (2-tailed) ,000 ,024 ,001 . N 25 25 25 25 Verifications and reconciliations Correlation Coefficient ,550** ,540** ,530** ,471** 1,000 Sig. (2-tailed) ,002 ,003 ,003 ,008 . N 25 25 25 25 25 Safeguarding of data and assets Correlation Coefficient ,449** ,481** ,364* ,325 ,529** 1,000 Sig. (2-tailed) ,009 ,007 ,035 ,059 ,003 . N 25 25 25 25 25 25 = Correlation is significant at the 0.05 level (2-tailed) Output table 6: Ranks Mean Rank Verifications and reconciliations 3,88 Authorization and approvals 3,78