Filing of financial reports, good ethics and compliance play a very important role in facilitating the success of Walmart. Being a global business with multibillion-dollar annual revenue, Walmart realizes that applying good ethics and compliance with financial reporting is very important not only for public image of the firm, but also for its own financial success. Ethics and compliance are, therefore, taken very seriously in the firm, and compliance to tax law especially in relation to SEC requirements is also taken very seriously. The Walmart’s management seems to take the issue of ethics and compliance very seriously, probably to counter the many accusations that are directed to the firm. Walmart uses Compliance as a way of avoiding law suits and poor public image. As a result, ethics and compliance are observed very closely and carefully, through the implementation of various ways of improving the firm’s internal and external financial reporting. As McGreggor (2011) notes, this is important for the firm’s future and stability (Walmart Audit Committee, 2012).
Procedures for ethics and compliance
Walmart is one of the few firms in the United States that timely and frequently files their financial reports. For instance, Walmart has already filed its financial reports to SEC for the quarter of 2012, which was done on 6th September 2012 (Walmart Audit Committee, 2012).
Use of a compliance committee
Walmart uses an independent third party to help in monitoring its internal and external financial reporting processes. This is made possible by the use of an audit committee that is made of at least three members, who are appointed by the board of the firm. The committee has the mandate of monitoring the firm’s financial reporting and making changes to its compliance procedures (Walmart Audit Committee, 2012).
The Audit Committee Charter has the mandate to assist the board of Walmart in monitoring the integrity of the firm’s financial reporting procedures, and the controls used for the implementation of ethics and compliance. Since the firm is multinational operating in countries that may have different accounting systems and requirements, the committee has the responsibility of helping the board of directors to monitor ethics and compliance in the global and local arenas. The committee is also responsible for monitoring the performance of the firm’s global and internal financial reporting processes, and also the firm’s compliance with legal and financial requirements (Walmart Audit Committee, 2012).
The Walmart Audit Committee Charter is also responsible for the appointment of the external auditor. This increases integrity and transparency since the Audit Committee Charter does not have vested interests in the operations of Walmart. If this process was to be left to the management, there would be a temptation to overlook some of the things that the firm may feel will affect their financial performance in a negative way (Walmart Audit Committee, 2012).The role of the Audit Committee Charter in avoiding this is to act as an outsider, who will not have any conflict of interest in the appointment of the external auditor. The Walmart Audit Committee Charter is also responsible for the compensation of the external auditors and overseeing their operations in Walmart. This not only frees the Walmart board and the management from the task of monitoring compliance, but also eliminates any form of conflict of interest (Walmart Audit Committee, 2012).
McGreggor, O. (2011). Financial Reporting: Compliance and Ethics. Journal of Financial Reporting , 5 (7), 49-53.
Walmart Audit Committee. (2012). Wal-Mart Stores, Inc. Audit Committee Charter. Web.
Walmart Company’s Financial Reporting