4 minute read 13 Oct 2021

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

Guy walking on a line over a canyon in Moab

The CFO as an agent of company integrity and ethics?

By Frederik Verhasselt

EY Belgium Forensic & Integrity Services Partner

Trusted fraud investigation advisor. Compliance professional. Team player. Problem solver.

4 minute read 13 Oct 2021

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

In brief

  • CFOs are protagonists in rolling out a code of conduct or ethical guideline.
  • Finance needs to screen third parties on ethical behavior.
  • Companies need to prepare for the new EU directive on whistleblowing.

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.

  • CFO Barometer

    The CFO Barometer is an independent research initiative of the editors of CFO Magazine in cooperation with EY Belgium. A questionnaire concerning a relevant CFO topic was answered by a representative sample of around two hundred Belgian CFOs from medium-sized to large multinational companies.

    The focus of the CFO Barometer is local, so the results are very representative of the Belgian market and as such the CFO Barometer becomes a benchmark tool for the CFO active in Belgium.

“The impact of a customer or supplier acting in an unacceptable manner can be enormous. Knowing who you are doing business with is essential.”

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.
Graph: Is it the job of finance to be the conscience of the organization?

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.

Graph: Is being compliant = being ethical?

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.

Graph: Are customers and suppliers screened for ethical behavior?

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.

Graph: Are customers and suppliers screened for ethical behavior?

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.

Graph: Does your company have a hotline that employees and external parties can use?

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.

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Summary

CFOs and finance departments have the necessary overview of their companies to guard ethical norms both internally and externally. But these norms need to be written down, they need to be supported by top management, and they need to be upheld by everyone in the company and the third parties that the company works with.

About this article

By Frederik Verhasselt

EY Belgium Forensic & Integrity Services Partner

Trusted fraud investigation advisor. Compliance professional. Team player. Problem solver.