The Failing CFOs and Corporate Scandals



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Code : GOV0007

Year :
2004

Industry : Business Law, Governance and Ethics

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction: Neelu: “HeyAnand…read Geoff’s article ‘Why companies and countries need good cops’”
Anand: “Yes of course, it was interesting. But do you think CFOs can be squarely blamed for all the major corporate scandals that we witnessed since 2002. People call them by names ‘chief fiddling officer’, ‘chief fraud officer’, and ‘chief fixing officer’.”
Neelu: “Unlike everyone else in the organisation, CFOs don’t have deniability. The chief executive can always say, ‘I didn’t know what was happening’. I know you are pained at this and more worried about your career path, CFO-turned-CEO. Never mind the diatribe against the CFOs, the time is not far when theywill be called ‘chief focus officers’ and ‘chief fidelity officers’. If the CEO wants the CFO to fiddle with the numbers, any CFO has two choices – to cave in, or refuse and take the matters to the Board of Directors.”
Anand: “What do you make ofAndrew Fastow?”
Neelu: “In 1999, Enron was the toast of the investment world, and many analysts thought, the then chief financial officer, Fastow as the man, who had made it so. In 1999, CFO magazine bestowed on himthe excellence award for Capital StructureManagement Category for creating businesses that needed capital in abundance without diluting Enron’s stock price or ruining its credit...



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