Financial Management and Accounting

Graduate School of Management and Technology

Announcements/News

Finance’s Role in the Organization
“Compliance isn’t enough for effective governance” cites Strategic Finance (September 2007).  Comprehensive corporate governance takes into account effective business policies, long-term corporate objectives, strategies for attainment, and guidelines for  monitoring performance.  Governance should be integrated with operations management and finance professionals “can play a role in providing top managers and executives with key information to foster the links between corporate governance and strategic direction” (p. 24). 

The article offers that because the CFO organization has been charged with SOX and other regulatory responsibilities, it is positioned to initiate and expand governance initiatives.  The framework of such initiatives should include regulatory compliance, rigorous performance measures, and timely and honest financial reporting.  The finance organization can implement such a framework by creating “a shared language of measurement” (p. 28), that is part of a financial accounting and reporting system that accurately collects and communicates relevant information about business performance to all stakeholders.  By serving as a link between stakeholders, finance helps all involved have the information necessary to ensure that “business operations are aligned with the vision of the board” (p. 28), and that the company as a whole can function within its governance framework. 

Setting the Tone for an Ethical Culture

Financial managers play a significant role in establishing and modeling ethical conduct in their organizations.  A recent article in Internal Auditor (June 2007) reminds us that “the adoption of a code of conduct is a fundamental step in the attempt to improve the ethical culture in today’s business world” (Rotta, 2007), and to guide behavior in organizations.  Organizations gain the following benefits from establishing strong corporate governance through an ethical code of conduct: increased staff motivation, wider deference for the law, safeguard for company brand and reputation, and stronger business relationships. 

Additionally, Strategic Finance (April 2007) reports that financial managers must become proactively involved in assessing the design of company ethics and compliance programs for yet another reason.  Having an ethics and compliance program in place may help senior management defend themselves against accusations of wrongdoing.  “Fines and other punitive measures otherwise imposed by the courts can be reduced or avoided if the organization is deemed to have an effective ethics and compliance program to prevent and deter criminal conduct” (Verschoor, 2007). 

How would you establish an ethical culture in your organization, and what programs might you employ?  To see an example of a code of conduct adopted by Dell, IBM, and HP, view Electronic Industry Code of Conduct.  To learn more at the US Sentencing Guidelines and recommendations for ethics and compliance programs, view How Good is Your Program?