Today’s CEOs and CFOs are exposed. Five years ago the general public still believed, for the most part, that businesses were responsible corporate citizens — now CEOs have to prove that they don’t have their hands in the till. The corporate world has been rocked in recent months with numerous financial scandals surrounding huge global businesses. The reasons for these scandals are many and varied — and it is likely to be some time before the real facts emerge. However, the trust that individuals and companies have placed in global business has been dealt a huge blow.
The failures of these companies have far-reaching effects. It is not just the directors and shareholders who are suffering — every person in the world who has a stock portfolio, pension, mortgage or other investments is worse off than they were before the scale of the crisis was made public.
Public confidence needs to be rebuilt — accountability, ethics and corporate responsibility must be the new core values and principles of the board. Business transparency should now be the watchword of every CEO.
It seems incredible that recent accounting “overstatements” should have remained undiscovered for such a long time. Yet in the UK, for example, that country’s Institute of Directors has recently reported that “a staggering 90% of boardroom decisions are still made without reference to data that still exists within the company’s information systems.
“The majority of board-level directors do not have access to unified and consistent data reports,” the report continues. “Instead, they receive a report from each department that is often compiled without reference to others. The result? Key information and critical trends can be overlooked.”
The recent accounting debacles offer further proof that organisations need to ensure greater and tighter financial transparency, and that senior managers must have an up-to-date and holistic view of the business. Without this it is virtually impossible to make the correct business decisions and to identify issues before they become crises.
Technology has a role to play in delivering this level of business transparency. Whilst no IT system alone can stop fraud, or people with their minds set on perpetrating it, by automating the process you reduce the risk of human error and human interference.
The Financial Executives International shares this sentiment. The FEI report on observations and recommendations for improving financial management, reporting and corporate governance, March 2002, concluded that companies must modernise their reporting and move towards voluntary disclosure of additional management performance indicators using web-based reporting techniques.
With the right computer systems in place, it is now possible to conduct a daily review of financial and business data at the overall corporate level and at the level of a specific country or even a specific office. My current company is deploying such a system today both internally and for our customers. It means key decisions can be based on real-time data, as well as past trends and forecasts. It also highlights inconsistencies very early on.
After the events of the past few months CEOs across the world need to use these tools and cross-checks when making business decisions. They have a responsibility to all stakeholders, employees, customers, partners and markets — to reduce the current uncertainty and to regain their trust.
CEOs must take a belt-and-braces approach to the management and transparency of the information at their disposal. They need to take a personal interest in the technology they have invested in and make sure it is being used to deliver critical information to them when they need it. Then, and only then, can the 99.9% of CEOs and CFOs who are not out to commit fraud or pull the wool over investors’ eyes have the confidence to stand up and say it won’t happen in their company. And, more importantly, only then will they be able to start putting some confidence back in the minds of a public currently filled with suspicion caused by the acts of a minority.
Brian Gregory is director of, e-business marketing for Oracle EMEA (Europe, Middle East and Africa).
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