Rescuing the Company

How CFEs Can Save Firms from Bankruptcy

November-December 2010

By Indra Djaja Utama

Top executives can drive their companies close to bankruptcy because it’s often easy for them to circumvent controls. “Bob” was the deputy president director of a branch of an international technical consulting firm with its head office in Europe. He was able to make false disbursements of cash totaling approximately US$250,000 over two years because this branch firm didn’t have an internal auditing department. The head office’s internal auditors came about twice a year to review the branch firm’s compliance with technical rules and procedures, but they never conducted actual financial audits. (A deputy president director is similar to an American chief operating officer.)

The branch firm’s president director (similar to an American company president or CEO), who had very limited knowledge of accounting and finance, unwittingly verified and approved the fraudulent disbursements. He trusted Bob because they were longtime friends, and he let Bob approve disbursements without requiring his own authorization.

For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.