Corporate governance : a tool to detect and prevent fraud

Abstract

This paper reviews briefly a number of aspects in relation to the financial crisis during the 1997 /1998 period and the major issues in corporate governance practices in Malaysia that were brought to the foreground as a result of the financial crisis. Corporate Governance reforms were then instituted and efforts made to improve the corporate governance practices by the corporate sector. The Malaysian Code of Corporate Governance, adopting the hybrid approach between prescriptive and non-prescriptive models, was launched in 2000 with a view to improve amidst others, better disclosure and transparency, board effectiveness and independence and shareholder rights and activism. This paper will look into the reforms made in respect of three areas: the shareholder rights and their roles in promoting corporate governance, the effectiveness of the board of directors and the role of auditors in detecting fraud.