New video by PwC calls for company management to do the right thing

New video by PwC calls for company management to do the right thing and for company directors to be comfortable they have discharged their responsibilities.

“Fraud is a disease, not only for business, but for society as a whole” says Duncan Wiggetts, Legal Counsel for PricewaterhouseCoopers Europe, at the inaugural Irish screening of PwC’s short film drama ‘Risking it All”.

Fraud and other illegal acts are getting increasing attention from regulators and the media, who are asking harder questions of corporate gatekeepers, such as independent directors, management and advisers. And it goes without saying that, should a company get into a serious situation and not address it properly, its reputation – and the reputation of the key people involved- could be irreparably harmed.

The film highlights the many temptations facing senior company executives, often driven by the desire to meet market expectations. Examples include the use of improper accounting practices – inflating revenues to achieve performance targets – to more extreme violations such as bribes and the forging of documents – ensuring that lucrative contracts are secured.

When these matters are uncovered, according to Wiggets, Boards and Audit Committees are sometimes loathe to face them head on: “Some Directors are unhealthily focused on the corporate reporting timetable rather than getting to the bottom of difficult issues - finding out how widespread the fraud or illegal activity is in the company, who is involved or who turned a blind eye. By ignoring these problems, Directors set themselves and the company up for possible restatements of financial statements, regulatory and criminal prosecutions, other lawsuits, disbarment from government tendering, a beaten down share price and a tarnished reputation.”

Bob Semple, Partner, PwC Ireland added:

“In our current very difficult operating environment, the application of sound corporate governance principles is critical. Now more than ever before, a new approach is needed. One that is not afraid to challenge previous practices and that insists on personal accountability at all levels in the organisation. Boards and Audit Committees must become more involved. They need to know and understand the business in detail. When there is the slightest sign of an irregularity, Directors have the duty to enquire further – if not, they could, in certain circumstances, be personally liable.”

In conclusion, Semple advises audit committees to be cautious of any signs of urgency coming from senior management. “Pressure to get the accounts signed off quickly without appropriate time to consider them should be seen as a danger signal.”

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