The ethics of modern finance and the business on the whole is critical for the smooth functioning of any organisation. Here we delve importance of compliance and ethics for companies.
Meta: Finance holds a lot of weight in today’s world. Society is propagated by monetary transactions, both minuscule and immense. The question of ethics and compliance is extremely important for a world such as this. We give you the CFO’s perspective on compliance and ethics.
Ethical boundaries make the world a better place. Value appreciation is automatic in a society that holds ethics as the pinnacle of its development agenda. It adds character and promotes standardized modes of functioning that could well add depth and character to positive social upliftment. There isn’t a segment in today’s social ecosystem that can be categorically disenfranchised from ethics. This blankets the whole of financial sector as well. The modern CFO is honor bound to make rational choices that can cumulatively lead to a surge in the company’s growth. At the same time, he is legally expected to acquiesce with compliance laws that are aplenty with the financial world that he thrives on. Here is a look at the CFO’s perspective on ethics and compliance.
Hierarchy sets its own rules about what transparency is. This is often a necessity as the flow of sensitive information should be, or at least, ought to be a highly contained system in the first place. However, the argument is hardly infallible. Public decisions that the company is about to make should be effectively communicated with employees at all levels of the office hierarchy. This should be a mandatory standard. A CFO, uniquely placed, as he is to deal with the financial underpinnings of a company he has found himself under, can at the same time firmly transition the information spread in a collected and diligent manner. This is because a CFO is already aware of the established information flow inside an organisation. He/she can leverage the best possible means through which further transparency can be added to a company by initiating the right meetings.
Integrity of Numbers
All the transparency in the world would amount to nothing if the numbers you are peddling to your employees as well as the rest of the world is cooked up in the first place. Projecting good financial health by doctoring numbers is a means to an end. Happy investors and stakeholders translate into healthy REM cycles for most CEOs and CFOs. Success is as valuable as the mythical El Dorado for people who lead organisations to successful stints. It is very important for CFOs to not lose perspective when it comes to dealing with the numbers generated by his/her organisation. “Creative financial management” is just another term for fraud. A good way to get around this tendency is to simply make it impossible at a managerial level. Making it a requirement for employees to sign representation letters that affirm that any financial statement they make on behalf of their companies would be factually accurate to the best of their knowledge.
Assessing Risks Accurately
Risks are evolving. If blockchains offer immaculate security and neutralise the risk of someone stealing your bitcoins, they are at the same time powering an unstable ecosystem that can easily crash at any given moment and make you lose your bitcoins anyway. There is apparently no way to completely devalue the possibility of risk in finance. It will keep emerging in different forms to justify the money paid to risk assessment teams all over the world. Risk assessment is quite simply an ethical responsibility at this point and reorienting future decisions according to risk assessment strategies, a moral one. CFOs are usually rooted to good decision making. Their position actually demands past experiences that have probably led to the development of a keen sense of personal intuition that is very important for the job. However, risk management needs to be intelligently addressed with these intuitive anomalies that are critical for growth.
Fostering A Culture of Ethical Primacy
An organisation manages to work as a unit because of the amalgamation of culture and belief systems that interact positively with each other. In a globalised world, it is no longer possible to only interact with people who share your belief systems and ideals. Cultivating a work environment that holds mutual respect as the most important facet of all is ultimately an ethical responsibility for every organisation and its leaders. It is only secondary for the CFO to also furnish and encourage a company culture that is rooted to integrity. To make the employees understand that a work culture that is dispossessed of standard ethical practices would over time implode and struggle to survive in this world.
Ethical quandaries are aplenty for the world at large. For the world of finance, this holds true in more ways than one. A CFO, being the financial harbinger of a company, has a responsibility to uphold standard practices that will be acceptable at the international stage. Diluted ethics and diminished compliance practices can provide amazing short term gains. They, however, fail to stand the test of time.