Gary McGaghey is the Chief Financial Officer (CFO) for Williams Lea Tag, a group of companies with interests in commercial insurance brokerage and property and casualty insurance. He has been on their leadership team as CFO, and before that, he was the Controls Manager for the same company. This article discusses issues that Gary McGaghey has felt have been important to compliance since he joined the board of directors.
CFOs and controllers create, manage and maintain internal controls that prevent fraud. They must work together to succeed and sustain credibility to ensure rules function properly. Sharing those commonalities has helped Gary McGaghey foster communication with his CFO counterparts, thus making Williams Lea Tag more compliant and their business more profitable.
Gary McGaghey believes that compliance officers must be familiar with the benefits of having a CFO/controller who can provide good counsel on financial matters and how best to utilize their expertise within a corporation’s business model. Having a CFO/controller on the board of directors provides a voice for those knowledgeable about internal controls.
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The most important challenge, according to Gary McGaghey, is that no matter how many policies and procedures, or new technologies you invest in, there will always be areas where you must rely on human judgment. He believes that fostering an open environment where different levels of employees feel as though they can speak up when something doesn’t seem right is critical to compliance and corporate growth.
The first of these areas is the preparation of financial statements. The current accounting standards require auditors to review and approve these reports from an independent, third-party auditor before they are issued to the public.
Gary McGaghey has noticed that certain companies have put in place processes where their payroll employees are allowed to sign off on time sheets— thus allowing employees to disregard or deny any errors within those time sheets.
“He says people need to realize that they cannot just enter anything into these reports,” he says. “Eventually, everyone will realize what’s happening and no one will take them seriously. Internal controls are supposed to prevent this from happening.