The CFO as an agent of company integrity and ethics?

The latest CFO Barometer surveyed CFOs about integrity and ethics. This is what we found.

Company ethics and integrity have a direct impact on the operation of an organization. If these topics are not prioritized, they can affect relationships with customers and suppliers and even lead to direct financial losses. The CFO is in a unique position to become an agent of ethics and integrity.

Should finance then be the conscience of the organization? 64% of respondents to the CFO Barometer survey say yes. And they give a few examples of how this could work:

• Draw up clear rules of conduct and follow them.
• Have a clear view of financial transactions and expense accounts.
• Map out sensitivities together with the business.
• Carry out targeted checks.
• Set up alarm bells that immediately signal unusual movements.
• Screen and motivate employees, customers, and suppliers in terms of ethical behavior.

The 36% who answered the above question with no, made the valid remark that all departments together ought to make up the conscience of a company, not just finance.

The relationship between compliance and ethics

58% of respondents believe that being compliant equals being ethical. 42% do not agree at all. As the figures clearly show, the link between compliance and ethics is not easily made. That mainly has to do with the fact that ethics is more dependent on personal convictions rather than clearly aligned rules.

A code of conduct or ethical guideline is necessary

A written behavioral standard or ethical guideline, as well as a description of ethical and unethical behavior, is therefore a must. Almost 60% of the respondents say they have a written-down standard of conduct within the organization.

A code of conduct or an ethical guideline is important to streamline integrity and conduct among employees. This should include several clear rules and matching sanctions that are fully supported by top management.

Screening third parties is a must

Customers and suppliers can also have an impact on a company’s integrity. Usually, when a problem with ethics arises, there is often a third party involved. Screening third parties is therefore a must, and it is the task of finance to ensure that this screening is effective. Yet surprisingly, 75% of respondents say they do not perform third party screenings.

Fortunately, there are certain tools that can assist the CFO in screening. There are, for example, a number of online screening and due diligence databases that can give insights into the third parties you wish to do business with.

Prepare for new EU directive on whistleblowing

From December 2021, companies, organizations, and governments must organize a reporting system for whistleblowers, according to the new EU directive. 83% of respondents have already set up a hotline that employees and external parties can use to report irregularities.

The remaining 17%, if they have more than 250 employees, will have to do so soon as it may become compulsory in a few months when this directive is transposed into national regulations. Organizations that employ between 50 and 250 employees still have time until December 2023.