This past week, I have spent the majority of my time working
very closely with the operation development and support teams. Within these teams, there are external
affairs, theme audit, and ethic management.
It has been very interesting to form a perspective on the dynamics that
exist within an organization when the auditing process is occurring.
Normally, (at least in Korea) the company being audited from
the external auditing company will inform the company that they will be audited. This gives the company ample time to run an
internal audit (as long as it’s not tax) to try and find any misstatement,
discrepancies and such. This is an
extremely important process because if they do find something that is
unfixable, they are able to form an explanation for the external auditors. This avoids being blindsided and having the
external auditors present this to local government.
The most common audit misstatement or discrepancy findings
are found within expense reports. For
example, when Yangwoo Kim, head of internal auditing group was teaching me how
they conduct the fieldwork (longest process of auditing), he came across
something that looked somewhat suspicious.
What he had found was an extensive list of expense claims from the sales
department. He explained that they had
been on an entertainment business trip to promote customer relations. However, the expenses he was seeing were from
after the trip, indicating some company credit card misuse. He explained to me that he would now have to
develop a plan to audit the department, request voucher information along with
credit card information, conduct the fieldwork, and give an internal review to
produce a report which he would present to either the deputy CFO or even
CEO. That same week, Yangwoo came back
to me to show me that after he had completed the entire auditing process, he
found that customers were brought back to Seoul to continue further business. Upon their arrival into Seoul, they had taken
them to lunch, dinner, and for a small workshop. He explained that if he had neglected to find
this information, the external auditors would have found it and he would have
been blindsided and left to explain what the deal was. However, because he had done this, the claims
were processes and noted legitimate
This may seem like a long and tedious process that a company
went through to finding “nothing”, but what it represents is the following up
that exists within a company to ensure the financial ethnics of expense claims
and so on. Ericsson-LG does extensive work
to ensure that all employees are behaving in a manner that represents all the
core values they stand for; professionalism, respect, and perseverance. It is incredibly important for companies to
consistently follow what they believe in and have a standardized system of
management to ensure that all levels of the company are held to a unified level
of standards.
