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08/31/2009 06:00am | Leave a comment | 0 Responses
Slippery Numbers: Why Distance + Visibility = the CFO’s Swat Team
By Karen (Northup) Watts
This was a bad week, bad month and bad couple of years for all of us who have sat in the CFO’s chair and have watched with absolute dread (and not a little worry) as the parade of corporate cheaters have been caught, tried and a very many of them found guilty and sentenced.
Dread – because this month we’ve watched in horror as both Bernie Madoff’s CFO and Refco’s CFO plead guilty to fraud. Worry – because the vast majority of us of us (sometimes brutally) honest former and current CFO’s, CAO’s, Controllers and Finance VP’s…. always worry. Worry that maybe we’ve unintentionally missed something that maybe an obscure accounting rule has changed or that an auditor may find something BAD that we never saw coming. It comes with the turf: financial execs worry – and I’d argue that it’s one of the things that makes us great.
And it’s the worry about the “BAD” that sometimes keeps us up at night. As the Chief Cook and Numbers Cruncher (as my husband likes to say), for the vast majority of my career, I burned the midnight oil before closes, audits, mergers and IPOs pouring over the things within my control. But it’s the stuff that I can’t control, the voluminous amounts of numbers entered, processed, allocated and spread by teams of other people that sometimes keeps me up at night.
If you are reading this and thinking “what a control freak,” you’re likely not a financial executive. J By necessity, all of us who sit in the Chief Numbers Cruncher (CNC?) chair covet controls and processes as much as any (non relationship) events in our life But like too many honest CFO’s that may have unfortunately been tripped up by outright fraudulent activities occurring right under our very noses with trusted employees and partners: YES, WE WORRY. Because despite all the very expensive accounting technology that we painfully have implemented, trained on, changed again, trained and paid for some more, etc…..it’s not rocket science that fraud is still going on.
This week we published a press release entitled, “Corefino
Offers CFO Community New Accounting Solution Aimed at Fraud Prevention.” It describes how Corefino’s very unique
combination of Software-as-a-Service + Business Process Outsourcing + the
Triple-C Platform ™ of more than 500+ Best Practices and Controls puts a very
harsh and direct spotlight on the entire
accounting process.
There literally is no place for accounting cheaters to hide if you are using Corefino. Call me paranoid (or worse) if you want, but I spent the last 3+ years building out a framework that moves the audit-ready/reconciliations financials process along factory process style. Like the concept of TQMP (Total Quality Management Process) made famous by Deming and others in the mid-1980’s – Corefino’s Triple-C platform includes both a technology AND people component. And we’ve borrowed from the TQMP idea of assembling expert teams who are responsible for perfecting/executing only specific tasks and then passing the “product” to the next expert in the process.
Now, if you are a CFO, you’re immediately seeing the beauty of this from a fraud prevention standpoint: one person might try to cheat if they are running a larger chunk of the accounting operation; but in the Corefino model they’d be discovered immediately as each successive expert reviews what’s come before them, adds their value, re-checks and moves it along the factory-stylized chain. If you then add to this mix that these outside Corefino accounting experts are no longer company employees and vested in the company’s success…you remove a lot of temptation. BPO employees are by the very set up, objective. They have no perceived advantage from a personal/departmental/corporate standpoint to have the numbers come out one way or the other.
So in other words – Corefino is pretty much the next best thing to having your own fraud SWAT team!
Distance, objectivity, visibility. It’s a powerful mix when it comes to numbers crunching! And for that, CFO’s (and their spouses who will no longer deal with the tossing and turning) will sleep A LOT better at night!