Role of the CFO in Ethics and Compliances of the Organisation
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Mumbai | Pune | Hyderabad | New Delhi | Chennai | Bengaluru INDIA CFO SUMMIT 2015 ROLE OF THE CHIEF FINANCIAL OFFICER IN ETHICS AND COMPLIANCES OF THE ORGANISATION
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Transcript of Role of the CFO in Ethics and Compliances of the Organisation
Mumbai | Pune | Hyderabad | New Delhi | Chennai | Bengaluru
INDIA CFOSUMMIT 2015
ROLE OF THE CHIEF FINANCIAL OFFICER IN ETHICS AND COMPLIANCES OF THE ORGANISATION
© 2015 SKP Business Consulting LLP. All rights reserved.
AN OVERVIEW
CULTURE CONTROLS
COMPLIANCE
FACILITATE
FACTORFAMILIARISE
ORGANISE
OBSERVE
OPERATE
Icons sourced from www.flaticon.com
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Marta AndreasenEx-Chief AccountantEuropean Commission
CASE STUDY I
Criticised the accounting system for being open to fraud.Excel spreadsheets for producing figures by the EuropeanCommission
Fundamental double-entry bookkeeping system wasmissing at European Commission
Raised concerns to internal management / line managers.Reported the concerns to European Parliament's BudgetControl Committee
Suspended and was later dismissed by EuropeanCommission
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Source: http://en.euabc.com/word/43
Observe
Controls
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Laurence De RegoExecutive Director –Finance and RiskEcobank
CASE STUDY II
Sent a letter to Nigerian SEC about certain attempts tomanipulate financial results of the bank
Highlighted attempts by the bank's Chairman to sell offassets well below the market value, write off debt,manipulate financial results and award the incoming chiefexecutive a bonus
Do Rego was suspended from her role in the bank, butcontinued remain on her stand
After a nine-month battle over allegations ofmismanagement, the Ecobank board decided tounanimously remove the controversial chief executive andreinstate do Rego to her post
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Source: http://www.ft.com/intl/cms/s/0/d080f8b2-2152-11e3-8aff-00144feab7de.html
Culture
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Anthony MenendezEx-Director Technical Accounting Research
CASE STUDY III
Identified that the Company routinely recognised revenueon bill on hold transactions
Reported to line management including the seniormanagement personnel recommending change inapproach
Menendez felt that they dragged their feet onimplementing a change that was certain to slow revenuegrowth
An email including his name was sent to select employees(including him) mentioning that SEC was investigating hisconcern. This was concluded as retaliatory effort after 9years
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Source: http://www.propublica.org/article/the-whistleblowers-tale-how-an-accountant-took-on-halliburtonl
Observe
ComplianceOperate
© 2015 SKP Business Consulting LLP. All rights reserved.
Matthew LeeEx-Senior VP, Finance, Lehman Brothers
CASE STUDY IV
Outlined six allegations of unethical accounting in a memoto senior management.
His concerns were that monthly balance sheet listed $5bnof assets above reality, bank failed to value its inventory offinancial products, that audit-level personnel wereinadequately qualified
The allegations were unfounded and there were nomaterial issues identified – The auditor referred theoutcome of Lehman’s internal investigation.
Lehman filed bankruptcy during 2008 in the wake offinancial downturn
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Source: http://www.theguardian.com/business/2010/mar/16/lehman-whistleblower-auditors-matthew-lee
Controls
FactorFamiliarize
© 2015 SKP Business Consulting LLP. All rights reserved.
Micheal WoodfordEx-CEOOlympus
CASE STUDY V
A niche financial journal in Japan published aninvestigative piece into deals Olympus had carried out in2008
Sent a series of letters to board members asking why thecompany had paid ¥70bn for three companies, including amail order skin cream group that did not seem to makemuch money
He was removed from position as a cultural change issueand was asked to move back to London.
The company admitted that the company's accountingpractice was "inappropriate" and that money had beenused to cover losses on investments
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Source: https://en.wikipedia.org/wiki/Olympus_scandal
Culture
Observe
© 2015 SKP Business Consulting LLP. All rights reserved.
Cynthia CooperEx-VP, Internal Audit WorldCom
CASE STUDY VI
Her team identified certain accounting entries in capitalexpenditure which were inconsistent
Preliminary enquires received negative responses from thefinance team and she was asked to not continue thereview
Her team along with her collated evidences post officehours and sought clarifications from the respectiveaccounting personnel
The confessions started flowing resulting in one of thelargest accounting scandals getting unfolded
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Source: http://ww2.cfo.com/human-capital-careers/2008/02/worldcom-whistle-blower-cynthia-cooper/
Organize
Facilitate
© 2015 SKP Business Consulting LLP. All rights reserved.
FRAUD CONTROL FRAMEWORK
Organize
Facilitate
Culture
Observe
Controls
FactorFamiliarize
ComplianceOperate
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