Membership News

CFO: Most dangerous job in corporate America

Mar 07, 2013

An article from CFO.com highlights the growing number of prosecutions against CFOs who didn’t know their activity was unlawful or failed to adequately supervise subordinates. Some merely certified financial statements that had to be revised because of another employee’s wrongdoing.

The scope of CFO liability is growing, creating a specter of unseen liability around every corner. A major cause for the shift is recent changes in the Dodd-Frank Act, which created provisions that support increased enforcement and civil actions.

For example, conduct that “fails to account for likely consequences” is now sufficient to establish a claim of aiding and abetting. A person can be charged with “constructive knowledge” — i.e., knowledge he should have had by applying reasonable care or diligence — without having been actually aware of any wrongdoing.

Read more examples in an article at CFO.com. All of the cases demonstrate the new consequences executives face for failing to detect or prevent misconduct.

CFOs need increasingly aggressive measures to prove to regulators that proper steps were taken to detect and prevent corruption and fraud. Clear, traceable communications are required for all supervisory and managerial activities to trace and identify any breakdowns in control protocols.

In this era of increased regulatory scrutiny, the right course might not always be black and white. Have a sensitive situation that you’d like to talk through? The OSCPA Ethics Consultant can help. This free service will pair you with a senior level CPA peer for a confidential call. Walk through the facts to achieve peace of mind about your decision. Call 800.686.2727 to be matched with an Ethics Consultant.