The US Department of Justice has escalated its pursuit of corporations that violate the Foreign Corrupt Practices Act and CFOs at multinational companies are on high alert about the situation. Concerns like this exemplify the assignments a CFO is likely to give accountants who enter corporate finance after they pass CPA examinations.
Last year, Lindsey Manufacturing was the first company tried and found guilty of violating the Foreign Corrupt Practices Act. Since then, the Justice Department has conducted inquiries against such big international operations as Johnson & Johnson, Tyson Foods, Alcoa, and Diageo plc.
Some violations have been assessed and fines levied. Monetary penalties are likely to remain the standard following reversal of the Lindsey conviction along with the judgments against two executives at the company. Still, to avert complications, corporate CFOs are implementing compliance initiatives by deploying staff with expertise covered in CPA study.
In fact, avoiding vulnerability to violations of the Foreign Corrupt Practices Act demands practices that adhere to superior auditing skills. An accountant typically develops audit experience as part of mandated CPA requirements. Subsequently, working in a corporate environment under a CFO will entail critical measures to avoid running afoul of such key legal matters as the Foreign Corrupt Practices Act.
The first step at multinational companies is review of the accounting at all foreign branches. CFOs rely upon a team to pursue audits of this nature by utilizing the details from CPA courses. The objective is assurance that all relationships with vendors or third-party agents are free of bribery and disallowed gifting. Auditing of acquired foreign companies is particularly important for US based corporations.
Next on the agenda for compliance with the Foreign Corrupt Practices Act is implementation of tracking procedures to simplify monitoring of potential violations. Early detection of such acts as insider trading or diversion of deposits held in trust is vital. Accountants are familiar with establishing these audit trails from their CPA study materials.
However, auditing techniques may comprise more than verification of financial figures. Other likely actions include extensive background checks, especially of key executives and board members. The aim is identification of previous lawsuits or regulatory disciplinary actions. Also on the agenda for Foreign Corrupt Practices Act compliance are creation of avenues for employees to give tips of suspicious behavior and procedures for investigating rumors. So, in addition to customary audit methods, corporate accountants can expect to monitor many functions within an organization.
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