Pete from DC, a compliance professional who’s always been a good friend of the FCPA Blog, sent this comment to our post about Indonesia’s cash-based economy. The post said in the country of 240 million people, a large majority don’t have bank accounts, and even some big businesses rely entirely on cash.
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Dear FCPA Blog,
We see this problem in many other countries with under-developed banking systems as well, and it gives rise to serious questions under the books and records and internal controls provisions of the FCPA because cash leaves no audit trail.
It, therefore, becomes quite difficult to prove (to the U.S. government’s satisfaction) that a) funds actually reached their stated intended destination, b) that the economic substance of the transactions was accurately recorded, and c) that the transactions that actually took place were authorized by management.
Because the U.S. regulators actually expect companies to be able to prove a negative (that no bribe was paid), an awful lot of management time is spent trying to figure out how to reconcile working in cash-based economies with modern internal accounting control requirements.
Pete from DC
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.