Marcus Evans 6th Annual Conference Financial Performance Management and Reporting Alignment, Integra

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Marcus Evans - 6th Annual Conference
Financial Performance Management and
ReportingAlignment, Integration and
Consolidation to Ensure Unified Global
Reporting

• ETHICS IN BUSINESS AND REPORTING - 2008
• BRIEF PRESENTATION
• BARCELONA SEPTEMBER 2008
• CSER AS A NEW STANDARD OF ANNUAL
  EXTERNALLY AUDITED FINANCIAL REPORTING
• Dr. Bob Boland
• Professor of Accounting
• International University in Geneva
• www.crelearning.com

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1. RELEVANCE TO FINANCIAL REPORTING

• Corporate financial reporting, is generally
  believed only when validated, by annual
  external professional audit.
• Non-financial reporting of CSER (Corporate Social
  (ethical) and Environmental Responsibility), is
  reported in great public relations detail, but is
  generally is not validated by professional audit?
  
• Can we believe it?

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1. RELEVANCE TO FINANCIAL REPORTING

• Could failure in CSER by our company or our
  stakeholders (shareholders, managers, staff,
  customers, suppliers, trade unions, community
  etc.) be our concern?
• Are we responsible for our stakeholders?
• What could we do?
• Could IMPACT provide a useful relationship?
• More anon.

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1. RELEVANCE TO FINANCIAL REPORTING

• Could failure in CSER affect our corporate stock
  price or even survival?
• Does non-financial reporting (or failure),
  seriously affect the validity of our financial
  reporting of the financial health of the company?
  Are we responsible for it?

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1. RELEVANCE TO FINANCIAL REPORTING

• When things are going well, ethical corporate
  reporting is relatively easy, but when there is
  intense pressure for survival, then some
  creativity in financial and non-financial
  reporting, seems to be justified!
• CESR (Corporate Environmental and Social
  Responsibility) is currently involved in a
  movement for Business Sustainability with
  great enthusiasm.
• BUT alas there is not yet much enthusiasm for
  external CESR annual corporate audit , to
  VALIDATE the reality of business practices in the
  tough world of business. Do we all prefer out
  illusions rather than reality?
• Cases

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2. GUIDELINES FOR ETHICAL BEHAVIOR

• Conscience of the person faced with a moral
  choice, with the
• penalty of feeling guilt, shame and remorse if
  we do the wrong
• thing
• Judgment of the community and wider society, with
  the penalty of
• public opprobrium, disgrace and loss of status
  or 'face'.
• Judicial judgment with fines and prison
  sentences, which comes
• into play if the first two are failing to
  curtail wrong behaviour.
• Question What is your personal ethics score out
  of 10?
• See the Ethics of Business book on Lulu.com
• Cases

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3. ETHICAL MINDS AND STANDARDS

• Cultural differences Europe, Middle East.
  India, Asia.
• Religious differences Christian, Moslem, Hindu,
  Buddhist.
• The UN Global Compact (Exhibit A) sets out ten
  principles of CESR.

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3. ETHICAL MINDS AND STANDARDS

• The UN Global Compact - ten principles of CESR
• 1. Support human rights.
• 2. Not allow human rights abuses (directly
  or indirectly
• indirectly through stakeholders e.g.
  managers, staff,
• suppliers, customers etc.)
• 3. Accept trade unions and collective
  bargaining.
• 4. No forced or compulsory labour
• 5. No child labour.
• 6. No employment discrimination
• 7. Environmental responsibility
• 8. Environmental protection
• 9. Environmentally friendly
  technologies.   
• 10. No corruption by any stakeholders

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3. ETHICAL MINDS AND STANDARDS

• So many UN and NGOs are involved.
• Question Should we buy or sell our goods and
  services, with a developing country business that
  abuses children with forced labour at the age of
  8 years?
• Cases

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4. ETHICAL IMPACTS

• Pressure to survive
• Continued employment
• Environmental damage
• Internal politics and whistle-blowers
• Accounting standards
• Global business realities
• Cases

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5.0 THE POTENTIAL FOR CREATIVE FINANCIAL
REPORTING

• Unlimited - with just basic accounting skills. Is
  helping management, by deliberately over-stating
  profits and assets ethical? What about
  deliberately under-stating?
• Increasingly creative complex financial
  instruments and options
• Tax - avoidance or evasion
• Off-shore legalities unlimited, with IT
  creative potential
• Transfer prices in multi-centered accounting for
  tax economy.
• Cases

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6. BUSINESS ETHICS CRISES OF 2005-8

• USA
• Europe
• Middle East
• Asia
• Africa
• Cases

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7. DEVELOPING GUIDELINES FOR FUTURE BUSINESS
SUSTAINABILITY

• 1. Recognize that ethical standards are
  necessary for business sustainability, to prevent
  Global Business becoming a Mafia-warfare, with
  unlimited harm done to others, in the name of
  profit and survival.
• 2. Recognize ethics as part of business company
  responsibility to Society, which requires
  validation in annual Financial and Non-financial
  (CESR) audit and reporting.

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 3. Recognize that they Financial and
  Non-financial (CESR) reporting both need
  professional annual audit, to be recognized as
  valid measures for assessing the financial health
  of a company.
• 4. Recognize the reality of pressure for
  survival in business, as a critical influence on
  creative Financial and Non-financial reporting.
  Nobody seems to sympathise with a failed company,
  which has high CESR standards.

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 5. Recognize that financial reporting must keep
  up with the ever increasingly complex
  international standards, whereby under as well
  as over statement of profits, assets and
  liabilities may be unacceptable.
• 6. Recognize that non-financial (CESR) reporting
  needs accepted realistic (culturally acceptable)
  international standards - like the UN Global
  Compact (Exhibit A) which is currently supported
  in principle but not yet in practice.

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 7. Recognize that for annual CESR audit to be
  effective, it needs standardised auditing
  techniques, training, examinations, reporting and
  professional qualifications. Work on
  environmental audit has already progressed with
  ISO 14,000 and 9,000.
• 8. Encourage EVERY company stakeholder
  (shareholders, managers, staff, suppliers,
  customers, communities, trade unions etc.)
  believe and adopt ethical Financial and CESR
  standards of action and reporting.

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 9. Encourage stock exchanges to require both
  annual Financial and CESR audit for listing and
  quotation.
• 10. Encourage World Bank, IMF, UN to require
  Financial and CESR audit, for funding projects.
• 11. Encourage all countries to require annual
  Financial and CESR audit for every business
  company.

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 12. Encourage Government and Business to control
  each other ethically and publicly, with no
  excuses for unethical action. Give press freedom
  to investigate breaches of Financial and CESR
  reporting standards.
• 13. Encourage a generous reaction to honest
  financial reporting mistakes of judgment.
• 14. Encourage increase in critical civil servant
  pay to reduce the motivation for corruption, and
  then make legal penalties for corruption without
  limit.

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77. DEVELOPING GUIDELINES FOR THE FUTURE

• 15. Encourage the teaching of business CESR in
  schools
• and university to achieve ethical values.
  Teach a code
• and practice of ethics, which is reality and
  not illusion
• a. Positive
• b. Transparent
• c. Open to all at every level
• d. Varying culture and basic values
• e. Realistic in choosing between alternative
  evils
• f. Obeying law as a measure of honesty
• g. A norm of recognized business
  achievement

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• 16. Encourage one or two very successful
• multi-nationals , to set an example, and to
  begin
• very carefully, to publicly adopt annual
  financial and
• annual non-financial (CESR) audit as a
  NORM of
• every business, and to publish results.
• This could begin a new public image norm
  that could
• motivate other companies to follow for the
  benefit of all
• the stakeholders of every business!
• For business sustainability and PREVENTION
  not
• merely diagnosis on CSER failure!!

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• Perhaps these suggestions are impossible , but
  like space travel and the internet
• the impossible seems to happen so often
  nowadays, especially when it becomes, like
  Sustainable environment and Business
  Sustainability
• a political (not merely an ethical) priority
  !
• Key skill of management in 2008 SURVIVAL!!

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• Perhaps you could be one of the first companies
  to do it and could prove that annual Financial
  and Non-financial (CESR) audit and reporting, is
  indeed good for the stock price and for business
  with a whole range of new benefits.
• Then perhaps Ethics in Business Financial and
  Non-Financial Reporting
• Can at last become a reality rather than
  illusion
• On we go together ?

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7. DEVELOPING GUIDELINES FOR THE FUTURE

• The Institute of Chartered Accountants in London
  has always been regarded itself as
• Chartered Accountant - The Traditional Honest
  Man of Business
• and now the Institute has not one bit three
  guideline web sites for CESR www.icaew.com/better
  markets www.icaew.com/ethics www.icaew.com/.
• This could be a first step towards CESR audit for
  all major companies, but the Institute is
  traditionally very cautious and perhaps is
  waiting for you?

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EXHIBIT A UN GLOBAL COMPACT

• 1. Support and respect the protection of
  internationally
• proclaimed human rights.
• 2. Not be complicit in human rights abuses.  
• 3. Uphold the freedom of association and the
  effective
• recognition of the right to collective
  bargaining.
• 4. Eliminate all forms of forced and compulsory
  labour
• 5. Effective abolition of child labour.

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EXHIBIT A UN GLOBAL COMPACT

• 6. Eliminate discrimination in respect of
  employment and
• occupation. 
• 7. Support a precautionary approach to
  environmental
• challenges.
• 8. Undertake initiatives to promote greater
  environmental
• responsibility.
• 9. Encourage the development and diffusion of
• environmentally friendly technologies.   
• 10. Work against corruption in all its forms,
  including
• extortion and bribery by both the company,
  and its
• customers and suppliers.

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EXHIBIT B. POSTSCRIPT

• Billions of dollars are donated each year for aid
  programs in Africa and other developing
  countries, where poverty and under-employment are
  the major causes of HIV/AIDS/TB/sickness/child
  death etc.
• According to the World Bank, corruption of aid
  funding, may vary from about 20-70.
• In 2008 some aid program specialists are
  beginning to believe that simple aid funding to
  Africa is a complete waste of money.
• They feel it would be far better to help African
  business to recover, develop and be much more
  effective.

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EXHIBIT B. POSTSCRIPT

• They suggest
• Stop giving money away to the wrong people
• Promote local business
• Make people work for the money they get
• Promote cheap portable telephones, as a highly
  cost-effective tool, for effecting change in
  traditional cultural values and attitudes!
• Let BUSINESS activity be a key INFLUENCE to
  reduce the suffering of poverty, sickness and
  under-employment in developing countries.

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EXHIBIT B. POSTSCRIPT

• Perhaps, such business activity could directly
  support the many UN and NGO development projects
  in poverty environments and could be consistent
  with the UN Global Compact.
• Perhaps this would that be an interesting CESR
  challenge for every multi-national business in
  2008? See the IMPACT web site and make contact.
• On we go together just one more thing ?
• Dr. Bob Boland
• www.crelearning.com
• robertboland_at_wanadoo.fr

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IMPACT CSER

• Opportunity for Company Social
• Environmental Responsibility (CSER).
• IMPACT THE INTERNATIONAL INITIATIVE AGAINST
  AVOIDABLE DISABLEMENT

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DISABLEMENT POVERTY

• Disabled people are the poorest of the worlds
  poor, of which about one in six are affected by
  moderate or severe disabilities.
• One human being in every ten is disabled.
• Many of the causes of disability are preventable
  or reversible

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UNITED NATIONS SUPPORT

• It was against this background that IMPACT in
  1983, was formally set up by the United Nations
  General Assembly, on a resolution supported by
  the British government with the strong support of
  WHO, UNDP and UNICEF.

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IMPACT FOUNDATIONS

• Twenty five years later in 2008 there are IMPACT
  Foundations (see websites) in the United Kingdom,
  Europe, USA, Asia and Africa.
• They annually provide over a million pounds
  worldwide for general health care, disability
  care, surgery, nutrition, immunization,
  mother/child survival etc.
• They have several major sustainable health care
  projects, such as Lifeline Express Train (India),
  the Jobin-Tari Floating Hospital (Bangladesh) and
  so many disability care and prevention programs.
  

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NEW CSER RELATED IMPACT PLAN STARTING IN
SEPTEMBER 2008

• Based in the World Health Organization Geneva
  complex, is a new small experimental IMPACT plan
  starting in September 2008.
• IMPACT Geneva/Suisse is designed to encourage
  the Social Responsibility of Business to fund
  short-term specific small micro-health care
  projects for children in relevant countries, and
  thus to provide rapid honest help with problems
  of child disablement, health care and poverty.

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PROJECT ONE FUNDING COMPANY ONE RESPONSIBLE
MD

• For each project there must be just one Company
  funding and one reliable local MD taking complete
  responsibility.
• Each project will cost only from CHF (Swiss
  Francs) 1,000 - 25,000, so that it can be rapidly
  approved, financed, started, finished and honest
  rapid feedback (positive and negative) within 3
  months.

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RESULTS RAPIDLY AND HONESTLY REPORTED
SUCCESS FAILURE

• Thus the lessons of new unexpected difficulties
  in the poverty of developing country environments
  could be revealed and learned!!
• We learn more from failure than success! So we
  must NOT keep it secret!

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TRANSPARENCY WEB SITE TO MAKE FULL DATA FREELY
AVAILABLE TO ALL

• An IMPACT- Geneva web site to be set up to show
  members of the responsible organizing committee.
• Dr. Kevin McGrath (Chief) - Coordinator of IMPACT
  worldwide in WHO Geneva 2000 and former
  UN/UNDP/WHO official and resident representative
  in many developing countries in Asia, Africa and
  Eastern Europe.
• Other members to be invited.

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TRANSPARENCY WEB SITE TO MAKE FULL DATA FREELY
AVAILABLE TO ALL

• List of projects becoming available for
  evaluation and funding.
• List of Business Companies which agree to fund
  each year, just one small chosen project (CHF
  (Swiss Francs) 1,000 - 25,000).

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TRANSPARENCY WEB SITE TO MAKE FULL DATA FREELY
AVAILABLE TO ALL

• Each company will be publicly recognized for
  its CSER (Corporate Social and Environmental
  Responsibility), with a specific IMPACT project.
• The specific project will be for specific
  health and disablement care problems of specific
  people, in a specific country, in which perhaps
  the Companys own products and services are
  actually being sourced, produced or marketed.
• Good CSER?

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OPPORTUNITIES FOR CSER

• Perhaps, with CSER audit, business activity will
  more directly support the many UN and NGO
  development projects in the disablement, health
  and poverty environmentss, of the developing
  world. This would indeed be consistent with the
  UN Global Compact.
• Perhaps this is the interesting CESR challenge
  for every multi-national business in 2008?

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CSER ILLUSIONS TO REALITY

• CSER progress is difficult and slow.
• Perhaps can achieve CSER annual external audit
  and just one small well publicised IMPACT project
  each year, to help us to change our traditional
  attitudes and illusions.

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CSER ILLUSIONS TO REALITY

• Perhaps we can make progress towards a reality of
  real CSER in our company, that we are proud to
  be publicized and to leave as a memory to our
  successors and our children?
• Make contact? On we go together?
• Dr. Bob Boland www.crelearning.com
• robertboland_at_wanadoo.fr