Real Life in the C-Suite
As noted, integrity and ethical values, management's philosophy and operating style, and related factors play a significant role in the reliability of financial reporting. The reality is that chief financial and other officers can and often have played a key role in avoiding fraudulent reporting, including in situations where a dominant CEO insists on making the numbers at any cost.
Over the years I've worked with many CEOs, mostly of large companies but some mid-size ones as well, and a significant number would be viewed as dominant, if not domineering, by anyone's measure. And we've seen unfortunate instances where a company's CEO orchestrated major and devastating financial reporting fraud. In some of those instances the CEO was the driver with the CFO going along for the ride; in others the CFO played a critical role in initiating and devising schemes to make it happen.
What might not be readily visible from the outside are the many chief executive officers who never have and never would suggest financial reporting fraud, and the many CFOs who would stand up to such a suggestion or order by refusing to participate and taking the consequences. Yes, in past years there might have been some shading at the edges, even so-called earnings management, for which regulators' and the investing public's appetite has been all but eliminated.
In any event, there's no doubt that even in past years the great majority of CEOs would never consider fraudulent financial ...