2008 Occasional Papers - AUK

interest in continuing to manipulate the accounting systemto produce a misleading, distorted, or downright fictionalportrayal of a business’s health and prospects.The extent to which management would use the profitimpact of a supply chain function in furthering thedysfunctional objective of CEO’s: to manipulate earningsis considered in this study. The message is clear: CEOsstill want value and in the supply chain function’s questto add value they may undermine the revenue aspects ofsome transactions.Following upon series of contacts between accountants,auditors and corporations, in-depth focus group discussionswere held on the causes of earnings manipulation, and itsnegative effects on financial, economic, social and culturaldevelopment of corporations in the Middle East. Moreover,what new games would accountants start to play tosupport earnings manipulation and earnings management?Reflecting upon the possibilities for strengthening theintolerance against corruption, it is essential to assessthe effectiveness of international efforts to support therule of law. Despite a proliferation of work in rule oflaw and anti-corruption in recent years, evaluations ofthe effectiveness of these activities are few. Recognizingthis gap in knowledge, the accounting profession in theMiddle East has begun taking stock of the effectivenessof rule of law promotion generally, and anti-corruptionspecifically. Business entrepreneurs in the Middle Eastare arguing that corruption can increase economicefficiency particularly when one sees very restrictiveregulations, bureaucratic laws and confiscatory measures.Corruption can reduce costs and thus increase efficiency.Accounting and peer pressureThe collapse of major U.S. corporations illustratesthe dangers of corporate ‘unaccountability’, and theinterrelationships that exist between big business,government and the professions whose job it is to holdthem to account. However, it has also raised a number ofspecific issues that hold lessons for the implementationand enforcement of anti-bribery legislation. At a time when30 countries are re-assessing their national measuresfor deterring bribery and corruption, so as to ensurecompliance with the Organization for Economic Co-operationand Development Anti-bribery Convention, then it isimportant to take the opportunity to review and learnfrom any lessons that were experienced in the U.S.The Organization for Economic Co-operation andDevelopment (OECD) is a unique forum where thegovernments of 30 market democracies work together toaddress the economic, social and governance challengesof globalization as well as to exploit its opportunities. TheOrganization provides a setting where governments cancompare policy experiences, seek answers to commonproblems, and identify good practice and co-ordinatedomestic and international policies. It is a forum where peerpressure can act as a powerful incentive to improve policyand which produces internationally-agreed instruments,decisions and recommendations in areas where multilateralagreement is necessary for individual countries to makeprogress in a globalised economy. Non-members areinvited to subscribe to these agreements and treaties.Evidence from around the world suggests thatMultinational Companies (MNCs), operating in a rangeof sectors, engage in bribery and corruption not onlyas a result of solicitation - but also as a choice strategy.The World Bank presents research, carried out in thetransitional states, and concludes that ‘bribery pays’ whenused either to secure large-scale procurement contracts,or to buy influence. The existence of powerful economicincentives, makes bribery all the more difficult to addressand underlines the need for rigorous enforcement of anti-briberylegislation. Concerns with corruption, over and above themoral and ethical discourse, include:• Impact on development and the poor: bribery andcorruption inhibit development as it is the poor whopay for the costs of bribes, either through higherprices, or lower quality services. Bribery also creates ademocratic deficit as key decisions affecting citizensare made away from the public arena for reasonsoutside the public interest;• Impact on markets: bribery and corruption distortscompetition• Integrity of public services: today’s privatisation andliberalisation policies are increasing the opportunitiesand incentives for bribery and corruption undermining47