Sunday, October 17, 2010

The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest

Enlightening article via Of Two Minds (H/T Financial Armageddon) featuring a commentary by an accountant with decades of experience in high-level global consulting firms and Fortune 50 U.S. corporations
I belong to a large number of finance organizations and sometimes I even assist clients with hiring a finance person. Since I have a lot of experience with finance and accounting, when I am interviewing these people I know when I am getting a BS answer and unlike most BS recruiters I do not steer away from controversy since I am truly looking for the most qualified for my clients and not who is just most marketable to them. After I start drilling down you would be amazed (or maybe you wouldn’t) how many of these CFO’s and Controller types were basically dismissed because they would not cook the books in some manner. Now maybe I have told you that I was asked to resign from one of the nations largest companies (a company that I worked hard for and saved from bankruptcy and due to my actions had created) in the US because I refused to book a revenue entry for over a million dollars which was unsupported and the CFO (I had been the CFO up until a merger) blew up with me when I asked him to send a memo telling me to record it. Funny, a few years and one acquisition later it melted down as one of the biggest accounting frauds in US history.
My next gig as the CFO for a NYSE company I basically walked in and found what I would consider a $60 million dollar accounting fraud in one day (once again a mark to market issue draining cash flow and sucking the company into a dark hole). Corrected that accounting problem and the company began to prosper but since I thought the board and upper management was so corrupt I left (Chairman of the Audit Committee was found guilty at another large company for back dating options).

2 comments:

  1. Sad but scary. However, what does that say about Sarbanes Oxley, assuming this former CFO's experiences were post SOX?

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  2. It's been questioned whether SOX has made any substantial changes in helping deter fraud but I'm not so sure. I believe the changes need to occur within the companies themselves. With companies solely focusing on profits, stories like the one from this accountant are bound to continue.

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