“We are again honored to have a ninth guest post from our friend and Richmond Chapter 2015 Vice-President, Rumbi Bwerinofa, CPA/CFF. Rumbi is a Director of the Queens/Brooklyn Chapter of the New York State Society of CPAs and a member of the NYSSCPA Litigation Services Committee. She is the editor of TheFStudent.com, where she discusses financial forensic issues.” – Charles Lawver-2015 RVACFES Chapter President…”
Every once in a while, I find myself being less than cutting edge. I tend to wait until version two (or later) to get a cellphone. Also, I waited until ten years after its release to watch Enron: The Smartest Guys in the Room. I can’t tell you what I was up to when it first came out, but I know that once I was ready to watch it, everyone had already seen it. So I waited… and waited… and waited. For ten years. I finally did get to watch it and it was eye opening, and very depressing.
Continuing education in ethics is an annual requirement for Certified Fraud Examiners and CPAs and, just about every time I attend an ethics session, I hear complaints, from fellow attendees, who don’t see why they need to be there. I’m surprised because the case studies presented during most of these sessions are intriguing. I’m also surprised because often the attendees don’t agree with one another on what the ethical approach to an issue is. These two factors alone have kept me interested during ethics training sessions! Watching The Smartest Guys in the Room hit home how important it is to not only have ethics training but also to refresh that training on a regular basis.
As CFEs and CPAs, we tell our clients about the importance of implementing fraud prevention and detection measures, such as:
- A code of conduct;
- Ethics training; and
- A whistleblower hotline.
However, how many of us tell our clients that they should remind their employees of these policies and controls on a regular basis? Not once, at any of the places I’ve worked, following initial training, have I received any guidance on enterprise anti-fraud policies and procedures. The reminders that do manage to make the rounds are concerned with the company dress code and office hours. So, employers are telling employees that they need refreshers on issues regarding the routine of what they do every day but only need to be told once how to help detect and prevent fraud in the company? They need to be told only once how ethical behavior is valued by the company? And yet, the New York subway system knows to constantly remind us that if we “see something” we should “say something”. The Enron movie was a stark testament to how really wrong and dangerous that kind of corporate thinking about the importance of ethical conduct is.
Throughout the film, I saw how, from the launch of the company, the tone at the top at Enron was at first shaky and over time became fully ethically challenged. As long as the CEO, Kenneth Lay, and his company were not themselves the victims of management’s predatory actions and as long as the company profited, he turned a blind eye to, and even actively encouraged, theft and cheating to make money. He willfully hired those who blatantly looked down on and ridiculed ethical conduct and, not once in the company’s whole sad story was any kind of staff ethical training or any kind of fraud prevention/detection program undertaken. During the documentary, former employees spoke of instances of blatantly unethical behavior to which they either turned a blind eye, or to which they became a part, mostly for personal financial gain. Even after everything fell apart employees who benefited from company actions found ways to rationalize what went awry. If all this weren’t enough, potential inside whistle blowers found they had no channel by which to communicate what they knew to be wrong. So, for almost twenty years, unethical practices flourished. And yes, I’m sure that Enron employees received those reminders about dress code and office hours more frequently than they received any kind of reminders about the importance of their ethical conduct or responsibilities regarding fraud detection and prevention.
As CFE’s and CPA’s we all need to make it a priority to get our clients to prioritize program of continuous ethics training to include staff responsibilities for fraud prevention and detection. Employers and employees must be given forums to talk about ethics often and they should be reminded what steps to take when they see something, in order to say something. If staff need to be reminded how to dress and what time to get to work, don’t you think they need to be reminded about the importance and power of ethics? The long term employment of all of us really does depend on it.