Hot potato: this month's dilemma.

AuthorBarman, Tanya
PositionUpdate - Letter to the editor

I am head of finance at a company that is part of a US group. I need to make a quarterly Sarbanes-Oxley statement and am under pressure to sign off on the fact that there are no loss-making contracts, though in reality there are. My CEO, following discussions with non-financial colleagues, feels sign-off is justified because there is a road map being developed showing how these loss-making contracts will become profit-making. I feel that I would need to report to the parent company to pursue this matter further, which may constitute whistle-blowing, and believe that there will then be a risk to my relationship with the CEO and other colleagues.

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Our response:

If at the time of reporting there are loss-making contracts, the requirements of the return would need to show this to ensure that "financial statements describe clearly the true nature of business transactions, assets, or liabilities" (Section 320 of CIMA's Code of Ethics). In order to comply with Sarbanes-Oxley requirements you should fully advise your management team of the requirements and your obligations. First, you should revisit the issue with the...

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