Working for company’s long-term interests

A company is an incorporate association, having a separate entity. The statutory definition of a company says it is formed and registered under related laws and regulations. So, a company is an incorporated institution created by law. It is considered a legal entity which can run business in its own name; it can sue and be sued.
Truth is most often used to mean being in accord with fact or reality, or fidelity to an original or to a standard or ideal. According to a survey of professional experts and others (which was carried out in November 2009 and participated by 3,226 respondents, including 1,803 philosophy faculty members and/or PhDs and 829 philosophy graduate students), 44.9 per cent of respondents accept or lean towards correspondence theories. This is the most accepted theory. Correspondence theories emphasise that true beliefs and statements correspond to the actual state of affairs.
To ensure truthfulness in day-to-day activities, an employee must act in conformity with fact/reality, show integrity in all respects, follow applicable laws, rules and regulatory guidelines and prepare financial statements as per Bangladesh Financial Reporting Standards etc.
 Sometimes we hear if any employee acts for the company, he/she is a good one. Is it true? All of us are working in any one of the organisations. But what is our priority? Company or truth? If we attach priority to the company, then compliance issue or good governance may be hampered or compromised. But if we focus on laws, rules and governance issues, then the company's interest will be protected in the long run. For an example, if one managing director (MD) contributes to the growth of business of the company, being above the average in a given period of time in the market, the board of directors thanks him and his management team. But subsequently, the regulator can ask for explanation about the business figure and also make an investigation. In one investigation report, it was found that business figures were fake. Some activities of MD and his/her management team were illegal. It was published in a national daily and the regulator also imposed penalty. Who gains in such a situation?
The management team must remember that the organisation has to be run on a going concern basis. 'Going concern' is a basic underlying assumption in accounting. The assumption is that a company will be able to continue operating for a period of time that is sufficient to carry out its commitments, obligations, objectives and so on.
In the long run, a company will benefit more. It will not face any adverse regulatory decision and will create goodwill, enjoy more advantages than competitors, increase business etc.
Any deviation from truth will create a lot of problems for a company's day-to-day operation. Regulators may make special audit/investigation, hampering its goodwill in the market. Competitors will then take advantages and the company may lose business and may also require to spend extra money to hold annual general meeting (AGM) or extra-ordinary general meeting (EGM) etc.
So, every employee needs to follow all applicable rules/provisions of law. If anything goes against the company, he or she will be required to follow any such development. Because, laws/regulations are 'Truth', meant to protect or safeguard interests of all the stakeholders, not only those of the company. Only the company's interest may not be truth all the time.
The writer is an FCA, working as Deputy Managing Director (Finance & Accounts) of Pragati Life Insurance Ltd.
chandrashekhar_cfo@pragatilife.com