What can be a consequence of failing to report fraudulent activity in an organization?

When an organization fails to report fraudulent activity, one of the significant consequences is the potential for legal liabilities and financial losses. This can stem from several factors. Firstly, if fraud is not reported, the organization may face civil and criminal penalties. Regulatory bodies expect organizations to take appropriate action in response to fraudulent activities, and failing to do so can lead to investigations and lawsuits.

Additionally, financial losses may arise from the fraud itself, as the organization continues to suffer losses without addressing the issue. Over time, these unreported fraudulent activities can escalate, leading to larger financial damages that could have been mitigated had the fraud been reported and addressed early on.

In contrast, the other options provided do not align with the potential consequences of failing to report fraud. Increased employee turnover generally relates to workplace dissatisfaction, which can arise from unresolved issues, but it is not a direct consequence of failing to report fraud. Likewise, a boost in company reputation or better team collaboration is unlikely to occur in an environment where fraudulent activities are ignored; rather, these outcomes are more associated with transparency and proactive management.