Question: Beamer, Inc. and Klaus Corporation are forming a jointly owned company to operate specialty chemical businesses now owned separately by Beamer and Klaus. The business proposition is to find operating efficiencies and to reduce costs by pooling those operations into a single company. Beamer and Klaus will each own 50% of the stock of the newly formed company. The new company will employ over 1,000 employees, have assets with a fair value of $5 billion, and will operate independently of Beamer and Klaus to the greatest extent possible.
Ray Ponder will serve as the CEO of the new company. His vision is that the company must have a good system of internal controls, high ethical standards, and must treat its employees with dignity and respect. Because of your knowledge of fraud detection and prevention, you are a member of a task force assembled by Ray to further his vision for the company. What suggestions will you make to the team to prevent fraud from occurring AS THE COMPANY IS IN ITS FORMATIVE STAGE? Be specific with your suggestions.