Foreign Corrupt Practices Act

1207 Words Sep 30th, 2013 5 Pages
FCPA PAPER
The Foreign Corrupt Practices Act of 1977 (FCPA) evolved from investigations by the Office of the Special Prosecutor that provided evidence of illegal acts perpetrated by U.S. firms in foreign lands. More than 400 U.S. companies admitted to making questionable payments to various foreign governments and political parties as part of an amnesty program (U.S. Department of Justice http://www.usdoj.gov). Given the environment of the 1970s and the proliferation of white-collar crimes (e.g., insider trading, bribery, false financial statements, etc.), particularly the payments made to foreign officials by corporations, Congress felt obligated to introduce legislation that led to the act. Congress's objective was to restore confidence
…show more content…
This provision of the act applies to issuers of registered securities and issuers required to file periodic reports with the SEC.
The accounting provisions require companies to "keep books and records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets". The purpose of this accounting provision is to make it difficult for organizations to "cook the books" or use slush funds to hide any corrupt payments. Representative means for transfer of corrupt payments which included overpayments, missing records ("No receipt"), unrecorded transactions, misclassification of costs and, retranscription of records. The accounting provisions include a requirement that companies design and maintain adequate systems of internal accounting controls. This will provide reasonable assurance that transactions are executed in accordance with management’s authorization, transactions are recorded as necessary and access to assets is permitted only in accordance with management's authorization. Any internal document that misrepresents the actual nature of a financial transaction could be used as the basis for a charge that the "books and records" section of the FCPA has been violated.
Enforcement of the act is shared. Civil and criminal enforcement of the bribery provisions for those not required to file with the SEC rests with the Department of Justice. Responsibility for