In 2017, the vehicle manufacturer General Motors, was penalised to fine $1 million (equivalent to 8 million HKD) to the Securities and Exchange Commission (SEC) for a deficient internal accounting control.
In 2018, Moody’s Investor Service (Moody’s), as an experienced company in managing investment and conducting research in bond market, paid $16.25 million (equivalent to 125 million HKD) to the SEC as they failed to maintain existing internal control model.
In 2019, Metropolitan Life Insurance Company (MetLife Inc.), as a holding corporation and famous insurance provider, was fined at $10 million (equivalent to 77 million HKD) to the SEC as they were suspected to violate accounting regulations.
Do you know why these companies are charged by the SEC? SEC is an independent agency of the US Federal Government which is mainly responsible for protecting investors and national financial industries by regulating the securities markets. For instance, MetLife Inc. was fined by the authority because of boosting own profits by both overstating and understating the accounting figure.
SEC in the US functions as the Securities and Future Commission (SFC) in Hong Kong. Failures in internal controls do not only occur in the US but also in where we are living right now.
Recently, SFC reprimanded and fined an international wealth management company, Goldman Sachs (Asia) L.L.C. for serious regulatory failures such as misconduct in daily operations and lack adequate in monitoring members. As a result, the company has to pay $350 million (equivalent to 2.7 billion HKD) which is one of the highest fine among SFC fining history.
Internal controls are the procedures or systems implemented by an organisation to ensure how the business can be operated effectively under government's regulations. An effective internal control model helps safeguarding the company's assets and reducing the potential risks the company is facing currently and in future.
Internal controls help establishing a risk-oriented approach. Conducting an internal control risk assessment helps us understanding the high risk areas in your business so we can mitigate them in advance. For instance, we can prevent errors and misstatement in accounting, and ensure no chances for the organisation to commit fraud. On the other hand, a good internal control system helps building better company process. For example, the members can follow the internal controls documentation to get a thorough exploration of company's practice and learn about it.
SDG experts are familiar in reviewing your company's daily operations and designing perfect internal control system for you. Feel free to book a consultation with us at info@sdgsolution.com as we are confident in providing the best solution for you.
SDG Solutions
“One Solution for Your Solutions"
Comments