Accounting guru asks auditors to have courage to expose fraud

By David Mugabe

A former vice president at WorldCom has asked internal auditors to have the courage to cause corporate change through averting fraud that can impact the health of companies and public life.

Cynthia Cooper, an American accountant whose efforts detected a $3.8b fraud in corporate America at WorldCom, warned auditors to guard against thinking they are incapable of making bad decisions saying the technical aspect of all fraud is people and choices.

“We all here have the power of choice, even in the most difficult circumstances, we still have the power of choice,” adding: “There exist universal values that can help people make good choices like the golden rule of “treating people the way you would want to be treated.”

Cooper spoke extensively on the topic: “The Rise and fall of Organisations: Lessons for Boards, Audit Committees, Chief Executives and Audit Professionals” at the Kampala Serena Hotel on Tuesday.

In 2002, Cooper and her team of auditors worked together and often at night and in secret to investigate and unearth $3.8 billion in fraud at WorldCom, a then global telecom firm.

Cooper and her team’s efforts were a masterstroke in bringing down WorldCom, which faced the double dilemma of fraud yet operating in an industry transcending to mobile telephony. She is currently the chief executive of CooperGroup.

She asked executives, board members and auditors to consider the potential consequences of their actions before they make resounding decisions in corporations.

“Look to the future and don’t keep it to yourself, discuss with other people and find courage, it is important to prepare. Pressures of society and family determine whether people tell the truth or lies,”

“If things don’t seem quite right, stick with your instincts,” noted Cooper.

Cooper admitted that the life of a whistleblower can be wretched but advised auditors to have faith and focus on “other people and not themselves.”

Uganda has had its fair share of corporate scandals and fraud both in public and private offices. The banking crisis of the mid 1990s saw many banks like Greenland bank closed because of insider lending and fraud.

The public offices have also been wrought with multi-billion cash scandals with the recent most notorious being the pension funds and office of the prime minister where billions have been siphoned.

Board members attending the 7th Board and Audit Committee Workshop pointed to a lack of action on works of auditors from senior management, intimidation and bit part role ascribed to them.

They also wondered whether during time for critical decisions, one should stick with their convictions or go with a crowd and be accepted.

During open discussions, Abbas Agaba from National Council for Higher Education (NCHE) disagreed that those who steal are poor people with family and societal challenges.

“It is greed, poor upbringing, theft, complacency by those with access to money, these are the people we have here,” said Agaba.

Timothy Etoori, president of the Institute of Internal Auditors of Uganda called for more resources to be put to the role of the auditor away from the support service role it currently enjoys.

Vision Group’s Gervase Ndyanabo also the institute’s past president said there exist frustrations that the works of auditors are not acted upon.

“But this is changing, let them have courage, stand their ground and they will make a difference, auditors can do much more than they are currently doing,” noted Ndyanabo.

John Muhaise, former chairman and managing partner at Ernst & Young agreed that there must be implementation culture while board members must be appointed on integrity.

“You issue reports this year, next year there is no action, timeliness is key because audits of three years ago are just complying with the law but there is no value,’ noted Muhaise.