The majority of directors of Canada’s 75 biggest companies believe more cases of financial accounting manipulation will emerge here this year, according to a survey by KPMG Forensic.
The accounting firm said 84% of the directors who responded said there will likely be more cases, while 46% thought manipulation could occur at the company where they sit on the board.
“It’s illuminating that our survey results show that this type of fraudulent behaviour carried out as a conspiracy by a group of senior people to deceive corporate directors, auditors, lenders and other stakeholders to line their own pockets, has come to be seen as commonplace,” James Hunter, the president of KPMG Forensic said.
The directors surveyed were divided on who in the organization should be responsible for ensuring the accuracy of a company’s books.
KPMG said only 28% of respondents thought the board is ultimately responsible, while 47% believe the chief executive officer should bear the greatest responsibility.
“This is an interesting choice considering how often CEOs themselves have been implicated when financial statement manipulation occurs,” Hunter said.
The survey’s other highlights included:
- 71% of directors said Canadian regulators should be more aggressive in dealing with companies where financial statement manipulation occurs.
- 72% said they rely on the external auditor more than anyone else to inform them of attempts at manipulation.
- 94% of survey respondents agreed that members of the audit committee must be independent and not involved in the management of the company.
KPMG also said the majority of respondents agreed that manipulation of financial statements by a conspiracy of senior managers was the greatest risk to reputation facing a public company today.