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The Foreign Corrupt Practices Act (FCPA) of 1977 and its amendment – the Trade and Competitive Act of 1988 – are unique not only in the history of the accounting and auditing profession, but also in international law. The Acts raised awareness of the need for efficient and adequate internal control systems to prevent illegal acts such as the bribery of foreign officials, political parties and governments to secure or maintain contracts overseas. Its uniqueness is also due to the fact that the USA is the first country to pioneer such a legislation that impacted foreign trade, international law and codes of ethics. The research traces the history of the FCPA before and after its enactment, the role played by the various branches of the United States Government – Congress, Department of Justice, Securities Exchange commission (SEC), Central Intelligence Agency (CIA) and the Internal Revenue Service (IRS); the contributions made by professional associations such as the American Institute of Certified Public Accountants (AICFA), the Institute of Internal Auditors (IIA), the American Bar Association (ABA); and, finally, the role played by various international organizations such as the United Nations (UN), the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and the International Federation of Accountants (IFAC). A cultural, ethical and legalistic background will give a better understanding of the FCPA as wll as the rationale for its controversy.

This paper aims to help auditors manage the risk of Foreign Corrupt Practices Act (“FCPA”) violations of the companies that they audit, particularly those with operations in Latin America.

First, the paper describes the relevant provisions of the FCPA. Second, it identifies the common schemes and transactions associated with heightened risk of FCPA liability in Latin America and provides recommendations to minimize this risk. Third, it discusses the responsibilities of auditors under U.S. securities laws and regulations with respect to the FCPA violations of their clients. Finally, it describes the sanctions that auditors could face if they fail to fulfill their responsibilities regarding these FCPA violations. The paper is based on data collected from various documents including laws, cases, accounting and auditing standards, litigation releases, press releases, deferred prosecution agreements, and enforcement actions.

Auditors have a responsibility under Section 10A(a) of the Exchange Act to design procedures that provide reasonable assurances of detecting the FCPA violations of their clients, which are illegal acts with direct and material effects on the financial statements. In addition, auditors have a responsibility under Section 10A(b) of the Exchange Act to report the violations of the FCPA that they detect during the audit to the appropriate level of management. If management does not take the necessary remedial steps, auditors must report FCPA violations to the U.S. Securities and Exchange Commission. In order to reduce their FCPA-related liability and fulfill their responsibilities under U.S. securities laws and accounting standards, auditors should closely scrutinize transactions with a high risk of FCPA liability. An analysis of FCPA cases occurring in Latin America reveals six categories of transactions with heightened FCPA risk.

While there is much literature regarding a company’s compliance with the FCPA, there has not been much literature about the auditor’s responsibilities with respect to the FCPA violations of their clients. This paper attempts to start bridging this gap by providing guidance to auditors regarding their responsibilities to detect and report FCPA violations.

The purpose of this article is to explain recent enforcement trends under the Foreign Corrupt Practices Act (FCPA), providing examples of recent cases.

The paper describes recent trends in FCPA enforcement, including increased enforcement by US authorities, greater vigilance by private industry, and global anti‐corruption efforts. It provides an overview of the FCPA, including the original reason why the Act was passed, its anti‐bribery provisions, the need to show corrupt intent, the interstate commerce requirement, exceptions and affirmative defenses, record‐keeping and control provisions, and penalties. It describes recent FCPA prosecutions and enforcement actions and draws conclusions on how to reduce FCPA risk.

The FCPA is a Watergate‐era law that was passed in response to disclosures by a number of large US corporations that they had made illicit payments to foreign government officials. The FCPA applies to bribes by any US issuer or domestic concern, paid to any foreign official, foreign political party, official or candidate, or official of a public international organization in order to assist in obtaining, retaining, or directing business. To prosecute, the government must show corrupt intent. The FCPA also contains provisions that require accurate record‐keeping and internal controls of US issuers. Violations of the FCPA are subject to both criminal and civil penalties.

The paper presents a thorough explanation, practical advice, and examples of recent violations and penalties by experienced lawyers specializing in FCPA compliance as well as white‐collar defense, securities regulatory matters, internal investigations, and anti‐money laundering.

Empirical research demonstrates that bribery has a detrimental impact on investment, economic growth, trade, and democratic governments. In response to rising bribery activity and the additional burdens placed on corporate officials by the Sarbanes-Oxley Act of 2002, enforcement of the Foreign Corrupt Practices Act (FCPA) of 1977 has reached an all-time high. Although many managers, financial officers, entrepreneurs, and auditors are aware of the FCPA's objectives and mandates, many do not do an adequate job of protecting their firms, employees, and/or clients from fines and prison sentences. The purposes of this paper are to (1) analyze and describe bribery and FCPA case filings, sanctions, payments (bribes), and value of business to be obtained; (2) describe and analyze the important provisions of the FCPA; (3) discuss vicarious liability or the liability of U.S. firms and others for the acts of third parties; and (4) make recommendations to help firms improve their compliance with the FCPA.

Discuss the importance of the Foreign Corrupt Practices Act (FCPA) to accounting education.

This study first examines the current trends and events underlying the reasons for increasing the incorporation of the FCPA and related anti-bribery issues into the accounting curriculum. Then best practices of increasing FCPA coverage and presenting the material to students are presented and explained.

The recent increase in FCPA and anti-bribery prosecutions, the penalties assessed, and the costs of internal investigation and compliance are significant. In addition, corruption is a way of life in many countries. Thus, the need for consultants, auditors, and accounting firms knowledgeable about FCPA issues is growing, especially as the FCPA has a books and records provision and demands effective internal control. However, universities have been slow to acknowledge this trend.

Pedagogical strategies for including FCPA issues in the accounting curriculum range from incorporating role-playing and developing case studies in existing classes to creating separate stand-alone FCPA and anti-bribery classes.

Accounting students, during their future business careers, will be better prepared to identify, evaluate, and choose appropriate actions/responses when faced with FCPA and bribery situations.

Despite the underlying trends that indicate the importance of integrating FCPA issues into the accounting education, many universities have lagged in introducing this subject area into their curriculum. This study is the first to provide the rationale and multiple pedagogical methods for facilitating accounting student education about identifying FCPA issues and selecting proper responses.

The Foreign Corrupt Practices Act (FCPA) has been controversial since its inception in December 1977. Despite the various attempts to repeal or modify the Act, this piece of legislation remained as originally enacted until the 1988 Trade and Competitive Act revision. Although the debates on parts of the original Act seem to have reached an impasse, nonetheless the US Government finds itself in a catch‐22 situation – pioneering international ethical business standards and seemingly losing the competitive edge in foreign trade.

This study aims to examine the determinants of Foreign Corrupt Practices Act (FCPA) violations and consequences of FCPA enforcements.

This paper uses publicly available data from Compustat, I/B/E/S and Thomson Reuters databases, combined with Securities and Exchange Commission (SEC) and Department of Justice (DOJ) cases, to extract insights on FCPA violations and enforcements using econometric approaches.

The main determinants of FCPA violations appear to be firm size, multinational structure, country corruption and Sarbanes-Oxley Act control weaknesses. Traditional misreporting risks (F-score and M-score) do not predict FCPA violations. This study discovers significant differences between FCPA violations by motivation, as in, sale generation, rent extraction or cost evasion. Bribes motivated by sale generation or rent extraction are partially driven by the extent of the firm’s global operations, whereas bribes motivated by cost evasion relate to internal influences. This study also finds that enforcement is more salient for criminal violations (DOJ enforcement), compared to civil violations (SEC enforcement).

This research provides new insights into the determinants of FCPA violations while underscoring the need for effective measures to combat bribery and promote ethical business practices. This research contributes to the ongoing efforts to curtail bribery, offering valuable insights into the characteristics of firms more likely to engage in bribery and contexts in which these activities occur. It provides critical implications for regulatory bodies, highlighting the differential responses of firms to varying types of enforcement, namely, criminal versus civil, as the authors observe greater decreases in internal control weaknesses following DOJ enforcement compared to SEC enforcement.

For enforcement agencies, the findings underscore the importance of rigorous criminal enforcement against FCPA violations, highlighting the improved control environments prompted by DOJ actions. Managers will find this research relevant, as it demonstrates that a firm’s entry into international markets substantially elevates the risk of its representatives engaging in bribery with foreign officials. In addition, the results are of interest to regulators, revealing that the underlying motivations driving a firm’s activities can significantly alter the factors to consider that might lead to an FCPA violation.

This paper is the original work of the authors and explores the determinants and consequences of FCPA violations and enforcement actions since 2002. To the best of the authors’ knowledge, it is the first to explore bribe determinants by their motive and documents industry-wide benefits arising from criminal enforcement.

This case is based on Weatherford International’s settlement with the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). Both the SEC and the DOJ were critical of Weatherford for its violations of the Foreign Corrupt Practices Act and for its “inadequate internal controls.” This case explores the Foreign Corrupt Practices Act (FCPA) violations and issues related to internal controls.

Case study.

This case is based on Weatherford International’s settlement with the SEC and the Department of Justice. Weatherford provided equipment and services in the oil and gas industry. Because international markets were growing faster than domestic markets, Weatherford made a strategic decision to pursue growth in international markets. The oil and gas industry has high levels of operating risk as did the countries that Weatherford decided to pursue operations in. However, despite the decision to take on additional risk, Weatherford failed to implement adequate systems of internal controls. The title of the case “A Perfect Storm” refers to Weatherford’s trifecta of operating in an industry with high levels of corruption risk, countries with high levels of corruption risk and failing to implement adequate internal controls despite those high operating risks (Department of Justice, 2013). Weatherford was ultimately assessed a $152m penalty for its violations of the FCPA that included bribery, volume discounts, improper payments and kickbacks.

Undergraduate and graduate auditing classes.

The study of international business has become increasingly important in recent years. So important that the American Assembly of the Collegiate Schools of Business (AACSB) has called for the internationalisation of business curricula. In 1992 and beyond, successful business people will treat the entire world as their domain. No one country can operate in an economic vacuum. Any economic measures taken by one country can affect the global economy. This book is designed to challenge the reader to develop a global perspective of international business. Globalisation is by no means a new concept, but there are many new factors that have contributed to its recently accelerated growth. Among them, the new technologies in communication and transport that have resulted in major expansions of international trade and investment. In the future, the world market will become predominant. There are bound to be big changes in the world economy. For instance the changes in Eastern Europe and the European Community during the 1990s. With a strong knowledge base in international business, future managers will be better prepared for the new world market. This book introduces its readers to the exciting and rewarding field of international management and international corporations. It is written in contemporary, easy‐to‐understand language, avoiding abstract terminology; and is organised into five sections, each of which includes a number of chapters that cover a subject involving activities that cross national boundaries.

The purpose of this paper is to explain the joint guidance on the US Foreign Corrupt Practices Act (FCPA or the Act) published on November 14, 2012 by the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC).

The paper explains the principal provisions of the Act covered in the joint guidance, where the joint guidance sheds light, and where it leaves uncertainty. Key issues covered are jurisdiction; corrupt intent, knowledge and willfulness; the “business purpose” test; gifts, travel and entertainment expenses; charitable contributions; definitions of foreign officials and instrumentalities; third parties; facilitating payments; extortion/duress; successor liability; accounting provisions; compliance programs; compliance monitors; and prosecution, resolution and declination decisions.

While it is unprecedented in federal law enforcement that the DOJ and SEC have provided the public with such detailed information on their joint FCPA enforcement approach and priorities, the guidance does not break new ground and generally reaffirms positions the agencies have previously espoused in other contexts. The guidance leaves open some difficult issues facing compliance officers and practitioners.

The paper provides expert guidance by experienced financial services lawyers.