A Study of Organisational Adaptation
8. A new century The OECD took on new or substantially increased responsibilities in the 1990s: corruption, corporate governance, taxation and regulatory reform. Unfortunately for an organisation that set itself as the champion of good governance, it came under criticism for its accounting system in the Financial Times in 2000. An independent report by Arthur Andersen, commissioned by the OECD, criticised the system as ‘outdated and inadequate’ and as failing ‘to provide a clear view of the body’s finances and the way it spends its $200m annual budget’. The report, commissioned in response to accusations of financial malpractice, came at a particularly embarrassing time, because the OECD was in the middle of a campaign to promote financial transparency in tax havens and financial centres. Arthur Andersen found no evidence of fraud, although reference to a likely misappropriation of funds in a draft was removed from the final version, with the OECD stating that this referred only to budget entries recorded in the wrong place in the accounts, not financial impropriety. But the report stated that it was difficult to gain an informed opinion of the OECD’s financial health. The report had been circulated to members but not published and had clearly been leaked to the Financial Times. Embarrassingly, the report stated that the Organisation’s financial information had ‘major deviations compared with generally accepted international accounting standards and practices’, and urged it to include in its annual accounts an income statement, a cash flow statement and explanatory notes. The report came...
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