Management accounting


The Department of Justice (DOJ) and SEC released a 120-page guide providing a detailed analysis of the agencies’ approach to enforcement of the Foreign Corrupt Practices Act (FCPA), which is designed to prevent bribery and corruption of foreign officials by companies seeking to gain a competitive business advantage.

The law was enacted in 1977, and enforcement has been stepped up in recent years as business has become more global. In every full year since 2007, the SEC has announced FCPA enforcement actions against at least 10 companies, according to a list provided on its website. Enforcement actions were much less frequent before 2001. In 2010, the SEC created a special unit to enhance enforcement of the FCPA.

The release by the DOJ and SEC is designed to aid businesses practicing in foreign markets and is available at tinyurl.com/aujcgnv. The guide contains a chapter that describes the FCPA’s accounting provisions, and defines who is considered a foreign official and the difference between proper and improper gifts.

In one chapter, the guide explains that the FCPA’s accounting provisions operate in tandem with the anti-bribery provisions and prohibit off-the-books accounting.

The “books and records” provision requires companies to keep records that accurately and fairly reflect transactions and dispositions of assets. The “internal controls” provision requires companies to maintain internal accounting controls that will ensure management’s control, authority, and responsibility over the firm’s assets.

According to the guide, a company’s internal controls and compliance program should be tailored to its specific circumstances with regard to operational realities and risks such as:

  • How products or services get to market.
  • The nature of the workforce.
  • The degree of regulation.
  • The extent of government interaction.
  • The degree to which the company operates in countries where there is a high risk of corruption.

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