THE AUDIT COMMITTEE'S ROLE REGARDING THE
PROVISIONS OF THE FOREIGN CORRUPT PRACTICES ACT

Alan Reinstein

Albert D. Spalding ir.
Wayne State University

Detroit, MI

Abstract

The Foreign Corrupt Practices Act (FCPA) of 1977, as amended in 1988,
prohibits individuals and corporations from using bribes and kickbacks to enhance
foreign commerce. Imposing stiff penalties for noncompliance, the FCPA includes
internal control and accounting and recordkeeping provisions. Several studies
show that corporate codes of conduct and other formal ethical policies help as-
sure compliance with ethical policies, including the provision of the FCPA.

Congress, the Securities and Exchange Commission (SEC), the courts, the
American Institute of Certified Public Accountants (A/CPA), and many other fi-
nancial statement users and preparers have endorsed the audit committee con-
cept as a means to oversee the audit function and otherwise strengthen the fi-
nancial reporting process. As such, audit committees should ascertain the effec-
tiveness of the entity's internal control structure and compliance with the provi-
sions of the FCPA.

After highlighting the provisions of the FCPA, this study examines the
extent of the audit committees' involvement in corporate compliance with the
FCPA-focussing on corporate codes of conduct-based on a study of 152 audit
committees whose securities are traded on the New York Stock Exchange (NYSE).
Recommendations for strengthening the committees' and companies' roles in this
area are also presented.

Introduction

Many provisions of the Foreign Corrupt Practices Act (FCPA), an anti-
bribery law enacted in 1977 and amended in 1988, depend upon effective cor-
porate internal control structures. The audit committee of the corporate board
of directors is the most logical group to develop, implement, and ascertain ob-
servance of corporate codes of ethics. The monitoring of compliance with such
codes is critical to firms' compliance with the FCPA, because the codes estab-
lish corporate policy regarding bribes, grease payments, and inappropriate disburse-
ments. Basee upon an analysis of audit committee operations, this study exam-
ines their oversight role regarding the FCPA.



24 Journal of Business Strategies Vol. 12, No. 1

Background: History and Importance of the FCPA
In 1976, such publicly traded companies as Bendix, IT&T and Lockheed

admitted to making millions of dollars in "questionable payments" to Japanese
and European high officials-with or without their companies' top executives
knowledge. These events and the post-Watergate environment (under the leader-
ship of then-President Carter) helped enact the FCPA of 1977. Adopted as an
amendment to the Securities Act of 1934, the law makes it a criminal offense
for publicly traded companies to bribe foreign officials, foreign political parties,
or candidates for foreign public office to obtain "favorable" business decisions.
The 1988 FCPA amendments allowed companies to give "token" or other "mi-
nor" gifts to clerical or "low-level employees to facilitate such administrative
functions as expediting shipments through customs or securing required permits."

Congress enacted the FCPA after ascertaining that many U.S. corpora-
tions bribed foreign officials and performed other forms of unsavory conduct to
secure business abroad. I So widespread was the appearance of corruption, that
Securities and Exchange Commission (SEC) investigations found over 300 Ameri-
can companies making such questionable payments to foreign officials.

2

Despite accusations of attempting to export American puritanical values
to different types of cultures, Congress enacted the 1977 FCPA to stress that
corporate bribery was per se unethical and detrimental to American business.

3

The FCPA allowed many foreign companies, based in countries that view brib-
ery simply as a way to do business, with little concern about corporate ethics-
who often received local export incentives-an opportunity to edge out Ameri-
can companies.

4
As indicated at hearings on the original FCPA, Congress be-

lieved that bribery (a) tainted the credibility of American business operations and
the principles of free enterprise in general; (b) caused embarrassment with allies
and foes alike; (c) created foreign policy difficulties; and (d) tarnished our
Nation's worldwide image.

s

Anti-Bribery Provisions.
The FCPA bans bribery, with prohibitions inserted both as an amendment

to the Securities and Exchange Act, as applied to publicly held companies con-
sidered "issuers" of securities, and as an identical stand-alone provision directed
at all other American businesses.

6
While the 1977 FCPA prohibited companies

from offering compensation to foreign officials to obtain or retain business, the
1988 FCPA allows them to make "grease payments" to essentially clerical or low-
level employees that facilitate performance of routine administrative functions such
as clerical processing or procurement of licenses.

7

Accounting Provisions.
The FCPA's record-keeping requirements mandate U.S. corporations to

keep books, records, and accounts in reasonable detail-to reflect fairly their trans-
actions and dispositions of assets-and to develop and maintain adequate sys-
tems of internal control.

s
Congress intended that these accounting standards would



Spring 1995 Reinstein & Spalding: Foreign Corrupt Practices Act 25

strengthen the credibility of corporate records, making the concealment of bribes
less likely.9

The FCPA's accounting requirements require affected companies to main-
tain an internal control structure to assure that (1) transactions are executed per
management's authorization, (2) records sufficiently permit preparing appropriate
financial statements, (3) access to assets are limited to appropriate personnel, and
(4) periodic checks are made to verify the existence of recorded assets and to
resolve any differences thereto.

lO

Penalties For Noncompliance With The FCPA

FCPA Statutory Penalties.
Both the FCPA's anti-bribery and the accounting provisions are enforced

via civil liabilities and criminal sanctions. II The SEC has jurisdiction to inves-
tigate potential violators and bring civil injunction actions against them to the
Department of Justice for prosecution. 12 The Department of Justice can investi-
gate U.S. companies other than issuers, and handles all criminal prosecutions,13
and its Criminal Division responds to written requests for an advance indication
of its position in light of specific circumstances under its "Review Procedures.',14

Under the 1988 FCPA, corporate violators face fines up to $2 million, and
individuals face fines up to $100,000 for willfully bribing foreign officials. Com-
panies may not pay their employees' fines, and violators face up to five years
imprisonment; corporations are "vicariously" liable for their employees' acts, and
such employees ma~ be convicted even if their employer was found not to have
violated the FCPA. 5 In fact, General Electric Corporation was recently fined
$9.5 million and agreed to pay an additional $59.5 million civil penalty, largely
for failing to keep accurate books and records per the FCPA's requirements.

16

Sentencing Guidelines.
Penalties imposed under the FCPA are subject to the U.S. Sentencing

Commission's guidelines,17 which require federal judges to examine the extent
to which corporate defendants have established policies and procedures designed
to ensure compliance with the FCPA. Corporations proving that violations of
FCPA provisions occurred despite the establishment of an effective compliance
program face significantly reduced sentences. IS

Ancillary Litigation
Corporations violating the FCPA risk having claims ansmg from laws

other than the FCPA. For example, companies suffering damages from lost busi-
ness caused by a competitor's illegal bribe of foreign officials can seek relief
under the Racketeer Influenced and Corrupt Organizations statute. 19 Companies
victimized by such violations can also bring traditional state causes of action for
damages incurred as a result of FCPA violations, such as claims of tortious in-
terference with contractual relations.

20



26 Journal of Business Strategies Vol. 12, No.1

The Audit Committee's Role In Achieving Compliance With The FCPA

Background of Audit Committees
Many entities use audit committees to protect themselves from fraud,

mismanagement and financial liability. Generally comprised of outside directors,
the committee serves as an intermediary between the external and internal audi-
tors and the full board of directors in their oversight role of the financial report-
ing process. They are primarily responsible for selecting the entity's auditor, dis-
cussing the audit scope with both types of auditors, inviting direct auditor com-
munications on major problems that arose during the audit, negotiating audit fees,
reviewing the financial statements and related external audit report for the full
board of directors' ultimate approval and otherwise overseeing the audit process
to enhance the independence of both types of auditors.

Wagner, O'Keefe and Bostwick (1988) found that effective audit com-
mittees (1) communicate better with internal and external auditors, (2) provide
enhanced external auditor independence, (3) more likely implement the auditors'
suggestions relating to internal controls, and (4) bring added advisory personnel
relating to the financial reporting process.

Many authoritative bodies and accounting organizations strongly support
the audit committee concept. The importance and number of audit committees
have grown significantly since they became mandatory for all New York Stock
Exchange (NYSE) listed companies in 1978. The AICPA's Commission on Au-
ditors' Responsibilities (1978), the National Commission on Fraudulent Finan-
cial Reporting (Treadway Commission), the federal courts and the United States
Congress

22
regard the audit committee as the most logical, cohesive body to in-

sure the prevention of illegal or questionable acts. The SEC also expects the
committee to monitor corporate conduct and indicated that " ... in all but one
instance, companies found to have rendered illegal payments did not have a full-
time audit committee.,,23

Establishment & Implementation of Written Ethics Codes
Serving as financial overseers, audit committees represent an important

step towards achieving effective internal controls and compliance with govern-
ment regulations. Several large CPA firms stress (Ernst & Whinney 1989), that
a major committee responsibility includes ascertaining if their companies have
in place adequate controls (i.e. to meet the FCPA's requirements) and, if not,
determine what additional controls are necessary.

Shaun O'Malley (1990), Managing Partner of Price Waterhouse, states that the
last decade has brought "dramatic" changes in the public's expectations from the
board of directors, management and both internal and external auditors. Man-
agement is primarily responsible for establishing adequate internal accounting con-
trols and avoiding "sensitive payments" whenever possible, and for disclosing
them should they occur.



Spring 1995 Reinstein & Spalding: Foreign Corrupt Practices Act 27

Audit Committees and External Auditors
In 1947, the AICPA infonnally endorsed the audit committee concept in a

Journal of Accountancy editorial (Carey). In 1967 and 1977, it fonnally en-
dorsed the audit committee concept as a means to strengthen the auditor's inde-
pendence and competence (Couel and Rankin 1989).

In 1988, the AICPA's Auditing Standards Board issued four Statements
on Auditing Standards (SASs) dealing with audit committees to help narrow the
"expectations gap" between what CPAs perform and what the public expects from
them. SAS Nos. 53 and 54, The Auditor's Responsibility to Detect and Report
Errors and Irregularities and Illegal Acts by Clients, require auditors to notify
audit committees (or equivalent authority, such as the finance or budget commit-
tee) of suspected fraud or illegal acts; SAS No. 60, Communication of Internal
Control Structure Related Matters Noted in an Audit, expanded the set of inter-
nal control deficiencies that auditors should report to audit committees or their
equivalent; and SAS No. 61, Communications with Audit Committees, requires
auditors to disclose certain potential and resolved matters pertaining to the audit
to audit committees or their equivalent. CPAs auditing publicly traded entities,
thus, must be especially careful to discuss potential internal control weaknesses
with their audit committees (Roussey, Ten Eyck, and Blanco-Best 1988).

Audit Committees and Internal Auditors
Audit committees should ascertain that their internal auditors examine the

prescribed and actual internal control structure by (1) examining appropriate docu-
mentation of compliance with the all regulatory policies and provisions (e.g., flow-
charts and organizational charts), (2) preparing internal control questionnaires and
other documents that test actual compliance, and (3) focussing on potential in-
herent risk areas of potential weaknesses in the control structure (e.g., areas where
much cash is spent without strong controls).

Schiff and Balog (1988) note that by updating, monitoring and enforcing these
codes (e.g., by protecting whistleblowers), internal auditors can assume such new
duties as resolving ethical conflicts. Many audit committees now use internal
auditors to help assure compliance with the provisions of regulatory acts and
corporate ethical policies by focussing more on operational audits and using more
sophisticated infonnation technology and communications and computer skills.
The Treadway Commission also concluded that internal auditors monitoring com-
pliance with corporate codes of conduct benefit from exposure to the audit com-
mittee and other high levels of the corporation.

Audit Committees and Management Accountants
As corporate employees, management accountants are more directly respon-

sible for assuring compliance with regulations and policies than are their in-
dependent auditors. Thus, they should help perform such tasks as providing
detailed analytical operating reports and other data regarding the company's
adherence to the rules (i.e. the provisions of the FCPA). and ascertaining that



28 Journal of Business Strategies Vol. 12, No. 1

the company considers all suggestions to strengthen the internal control struc-
ture.

The audit committee can also ask management accountants to identify and
monitor transactions between management and supervisory personnel to compre-
hend better how the company delegates decision-making authority between these
two parties. The committee should check that such transactions are documented
properly, that management continuously improves its internal control structure, and
that it follows its prescribed procedures. In their interactions between manage-
ment, internal and external auditors and management accountants, audit commit-
tees can help assure adherence with the provisions of the FCPA. They should
ascertain that (a) internal control mechanisms are functioning that can detect ques-
tionable behavior and that (b) financial reporting and other audit processes are
operating as prescribed. Continuous monitoring, reinforcing, and strengthening
internal control mechanisms will help prevent abuses and provide compliance with
the FCPA provisions.

A Survey Of Audit Committees

Impetus
The above discussion shows the audit committee's key role in helping

their companies comply with the provisions with the FePA, including the moni-
toring of corporate codes of conduct. A survey of present practices was taken
to determine how audit committees help monitor their companies' ethical and
related policies.

Methodology
After reviewing the FCPA and related literature, a survey instrument was

pretested and revised based upon the comments of six academicians, five audit
committee members, and seven other corporate directors. The data were obtained
from a mail survey of one randomly selected committee member from 152 ran-
domly selected companies whose securities are traded on the NYSE. A total of
109 usable responses were obtained, and 22 committee members did not respond
for reasons beyond their control (e.g., they were undergoing major surgery, were
retired, or no longer with the company). Moser and Kalton (1972) found that
such addressees who are "outside" the original survey population should be sub-
tracted from the original survey population before calculating the response rate.
Thus, the adjusted 83.3% response rate {i.e., (109)/(152-22)} exceeds
Kerlinger's (1973) 80 percent criterion for a satisfactory response rate, where no
further testing for non-response bias appears necessary.

Results
The survey first ascertained if audit committees follow detailed work pro-

grams for their activities. including reviewing the internal control structure-an
indispensable component of ascertaining compliance with the provisions of the



Spring 1995 Reinstein & Spalding: Foreign Corrupt Practices Act 29

FCPA. A total of 75 percent of the respondents followed such work programs,
and, as several respondents indicated, that number that will undoubtedly rise as
the audit committee process matures.

The survey next examined aspects of the respondents' Codes of Ethics
with these results appearing in Table One, below. The vast majority (93 per-
cent) of sampled companies use codes of conduct barring questionable or illegal
payments, and 66 percent of them require employees to provide written assur-
ances that corporate funds were not used for illegal purposes.

Table 1

Characteristics of Corporate Codes of Ethics Percent

Code of Ethics Established at Corporation 93.4

Code of Ethics Publicized Throughout the Corporation 67.1

Code of Ethics Includes Anti-Bribery Provisions 35.9

Code of Ethics Defines "Grease Payment" Provisions 14.0

Code Administered Via Internal Control Functions 8.7

Code Compliance Included in Internal Control Functions 58.6

Key Managers Annually Certify Code Compliance 35.6

Code Compliance Monitored Annually in Other Ways 20.2

FCPA Compliance Report Provided to the Audit Committee 10.7

FCPA Compliance is Audited by the Independent Auditors 25.8

Upgrading Compliance with Written Anti-Bribery Policies

Increased Involvement of the Audit Committee
To comply with the FCPA, management must establish and monitor a

written code of ethics prescribing appropriate behavior, identifying penalties for
noncompliance, and developing effectuate programs to insure adherence to these
procedures. As shown in Figure A, the audit committee must work with such
parties as internal and external auditors, management accountants and top man-
agement to assure that FCPA requirements are met.

Marsh and Powell (1989) stress that effective audit committees use char-
ters to emphasize that they receive adequate information from management and
both types of auditors. Some elements of the charter include authorizing adequate
resources to discharge its responsibilities, methods to enhance both types of au-
ditors' independence, means to strengthen the internal control structure and oth-
erwise assure compliance with the FCPA's provisions.



30 Journal of Business Strategies

Figure A
Audit Committee Involvement with FCPA Compliance

Vol. 12, No. 1

/1 Audit Committee l~I
Coordinates..

Internal External Auditors Management
Auditors (CPAs) Accountants

~I
I .

1/To Accomphsh"FCPA Compliance
Strengthening of
Internal Controls

I
~FrOlrOint~

Development of FCPA
Compliance Reporting

Procedures

Implementation
and Improvement
of Adherance to
Code of Ethics

Certification of Compliance by Key Personnel
While management is responsible for establishing internal accounting con-

trols, most violations of the FCPA occur when management overrides these con-
trols (Neumann 1981). Just as independent auditors obtain management's repre-
sentations to confirm oral or implicit representations and to remind management
of its primary responsibilities for the financial statements, audit committees should
obtain management's written assurances that they have met the FCPA's require-
ments. As shown in Table Two, several survey respondents also indicated that
rather than the committee, receives such written assurances, and two stated that
they receive these reports "via their independent auditors."

Table 2

Corporate Personnel Providing
Written Assurance of Compliance Percent

Presidents 88.6

Vice Presidents 81.4

Other Corporate Officers 78.6

Directors 58.6

Other Corporate Employees 32.8



Spring 1995 Reinstein & Spalding: Foreign Corrupt Practices Act 31

The category "Other Corporate Employees" includes certain marketing,
manufacturing, and financial managers. The above table suggests that, while over
half of the directors provide these assurances, a much larger majority of presi-
dents, vice-presidents, and other corporate officers must also comply, since non-
director officials make many more day-to-day decisions than do directors and have
more exposure to potentially illegal acts.

Audit Committee Review of Management Compliance Procedures
Written assurances alone do not relieve audit committees of the respon-

sibility of overseeing compliance with the FCPA. To properly monitor internal
accounting controls and to ascertain that compliance with the FCPA is based upon
objective and competent evidence, audit committees should review management's
evaluation of the adequacy of corporate internal control procedures and request
that both types of auditors corroborate these conclusions. Management should
also respond fonnally to pertinent comments found in the independent auditor's
management letter and in internal audit reports. These responses should detail
management's agreement or disagreement with the auditors' findings and resolve
the problem or deficiency.

Recommendations of the Treadway Commission
The Treadway Commission (1987, pp. 32-33), comprised of leaders from

the AICPA, National Association of Accountants (now Institute of Management
Accountants), Financial Executives Institute, American Accounting Association,
and Institute of Internal Auditors found that the most influential factor in deter-
ring fraud (including, implicitly, violations of the FCPA) was the tone or atmo-
sphere set by top management, the board of directors, and the audit committee.
The Commission also recommended that all public companies maintain internal
controls to provide reasonable assurance to prevent fraudulent financial reporting
or subject it to early detection. Companies should also develop written codes
of conduct. All publicly traded companies should also create internal audit de-
partments whose directors have unrestricted and direct access to both the audit
committee and the chief executive officer. Audit committees should also ascer-
tain that the internal and external auditors coordinate their efforts.

The Commission (1987, pp. 179-181) stated that top management overseen
by the board of directors is primarily responsible for the company's financial re-
porting, and all public companies should establish effective audit committees to
achieve this goaL These committees should (1) be infonned and vigilant, (2)
set forth its responsibilities in a written charter, (3) receive adequate resources
to perfonn its duties, and (4) discuss with management and the auditors areas of
potential internal control weakness, contingencies, claims and assessments-all
areas directly relating to compliance with the provisions of the FCPA.

The Commission encouraged all finns to adopt, publicize and enforce writ-
ten codes of conduct that contain a conflict-of-interest and corporate policies of
compliance with domestic and foreign laws, including those related to proprietary



32 Journal of Business Strategies Vol. 12, No. 1

information, and also protect whistleblowers. The Commission emphasized that
the audit committee should review compliance with the corporate code and re-
port its findings to the entire board of directors.

These developments suggest that the FCPA will buttress the CPAs' study and
evaluation of internal control structure. CPAs currently evaluate those controls
and ascertain the reliability of accounting data to determine the nature, timing
and extent of other audit tests, not to form an opinion on management's repre-
sentations of the adequacy of the entire accounting control system. Yet audit
committees will undoubtedly request CPAs to expand their scope to help the
committee measure compliance with the FCPA. Approximately 92 percent of the
surveyed audit committees not only reviewed the CPA's audit scopes, but sev-
eral respondents noted that the audit scope had been expanded to enable the
committee to determine adherence to the FCPA.

CPAs assisting audit committees in judging the overall adequacy of in-
ternal control should help ascertain if employees adhere to management's formal
Code of Conduct. If such codes do not exist, CPAs can help prepare them and
monitor adherence to them (Ecton and Schroeder 1978), by (a) determining that
all employees read and sign it, (b) evaluating the level of management's compli-
ance monitoring and the adequacy of reporting deviations from policy, and (c)
scrutinizing the most susceptible areas of risk (considering the nature of the in-
dustry and the company's scope of operations). These findings can become part
of the CPA's management letter, which audit committees should view as a par-
tial indication of compliance to the FCPA.

Audit Committee Review of Internal Controls: FCPA Implications
Since internal auditors focus on improving the efficiency of corporate

operations and strengthening the internal control structure, they should be pri-
marily and directly responsible for adherence to this aspect of the FCPA. Audit
committees should monitor internal auditors' operations and provide them with
direct access to the committee. The survey found that 95 percent of the sampled
firms' chief internal auditors had direct access to the audit committee. The re-
maining five percent observed that since the chief internal auditor reported di-
rectly to the chief executive officer and has direct access to the committee should
the need arise, no reason existed to formally report to them.

In monitoring compliance to the FCPA, audit committees should coordi-
nate the efforts of internal and independent auditors to minimize any duplication
of efforts. About 85 percent of the sampled audit committees reported that they
plan to use both types of auditors as their "independent financial staff' in gain-
ing assurance of compliance with the FCPA.

The surveyed audit committees overwhelmingly (93 percent) reviewed the
internal auditors' reports and suggestions for improving internal accounting con-
trols and compared them with similar reports received from the CPAs-a pro-
cess that helps audit committees ascertain if management rectifies all reported,
material weaknesses in internal accounting controL



Spring 1995 Reinstein & Spalding: Foreign Corrupt Practices Act

Conclusion

33

Compliance with the FCPA is still a challenge for many corporations.
The survey results indicate that while most firms have codes of ethics, they of-
ten do not audit compliance with them, including adhering to the provisions of
the FCPA. Although many internal and external auditors have given this area
increased attention, the importance of this issue suggests that audit committees
should monitor their progress and otherwise help them achieve full compliance
with the FCPA's provisions.

As a result of the FCPA, financial statement users and governmental au-
thorities expect greater audit committee involvement in the monitoring of corpo-
rate conduct. In turn, the committees must rely heavily on management and in-
ternal and independent auditors to assure compliance with the FCPA. Audit com-
mittees should initiate a "top down" approach to the problem, including review-
ing compliance with corporate codes of conduct.

Endnotes

1 U.S. Senate Report. No. 114, 95th Congress, 1st Sess. 1-2, reprinted in 1977 U.S.
Code Congress & Administrative News 4098, 4099.
2 U.S. Senate Report No. 114, 95th Congress, 1st Sess. 3, reprinted in 1977 U.S. Code

Congress & Administrative News 4098, 4101.
3 U.S. H.ouse of Representatives Report No. 640, 95th Congress, 1st Sess. 4-5 (1977),

and U.S. House of Representatives Report No.114, 95th Congress, 1st Sess. 3-4, reprinted
in 1977 U.S. Code Congress & Administrative News 4098, 4101.
4 Bribery is, in fact, a normal part of doing business in many countries. See "Big

Profits in Big Bribery," Time, Mar. 19, 1981, at 58-67; "Bribery: A Shocker in U.S., But
a Tradition Overseas," U.S. News & World Report, Apr. 12, 1976, at 33-34; "Coping With
the New Rules of Conduct," Business Week, Oct. 10, 1977, at 76; "Why Americans Pay
Bribes to Do Business Abroad," U.S. News & World Report, June 2, 1975, at 57-58.
5 See U.S. House of Representatives Report No. 640, 95th Congress, 1st Sess. 5 (1977);
U.S. Senate Report No. 114, 95th Congress, 1st Sess. 3-4, reprinted in 1977 U.S. Code
Congress & Administrative News 4098, 4101; and U.S. Senate Report No. 1031, 94th
Congress, 2d Sess. 3 (1976).
6 15 U.S. Code § 78dd-1, as applied to issuers, and 15 U.S. Code § 78dd-2, as ap-

plied to all other domestic concerns.
7 15 U.S. Code §§ 78dd-l(b), 78dd-2(b), 78dd-l(f)(3), and 78dd-~(h)(4).
8 15 U.S. Code § 78m (b)(l)-(3).
9 U.S. Senate Report No. 114, 95th Congress, 1st Sess. 7, reprinted in 1977 U.S. Code

Congress & Administrative News 4098, 4105.
10 Note: Congress took these provisions directly from the verbiage of SAS No.1.
11 15 U.S. Code §§ 78 m (b)(6), 78dd-l(a), 78dd-2(a)-(c), 78ff.
12 15 U.S. Code § 78u(d).
13 15 U.S. Code § 78dd-2(c).
14 28 Code of Federal Regulations 50.18.
15 15 U.S. Code § 78dd-2(g) (1994).



34 Journal of Business Strategies Vol. 12, No. 1

16 " Fraud, GE Pleads Guilty in Israel Anus Sale, Settles Qui Tam Case; Govt. Recov-
ers $69M," 1992 Federal Contracts Report, 58 (July 27): d19.
17 18 U.S. Code §§ 3551·3559, and 28 U.S. Code §§ 991-998 (1994).
18 United States Sentencing Commission, Sentencing Guidelines for Organizational De-

fendants, § 8DI.4(a), 49 Criminal Law Reorter (BNA) 2059, 2086 (May 8, 1991).
19 See e.g., Environmental Tectonics v. WS. Kirkpatrick & Co., 847 F2d 1052 (3d. Cir.),

mc..!1 110 S. Ct. 701 (1990) (RICO claim for damages suffered as a result of competitor's
alleged bribe of Nigerian officials to obtain defense contract).
20 Citkorp International Trading Co. v. Western Oil & Refining Co., 771 F. Supp. 600
(S.D.N.Y. 1991). ~ Lawrence W Newman and Michael Burrows, "Private Claims Un-
der the Foreign Corrupt Practices Act," New York Law Journal, International Litigation
(February 20): p.3.
21 See, for example, discussion of Penn Central and Phillips Petroleum cases, Coopers
& Lybrand. 1992 Audit Committee Guide. New York: Coopers & Lybrand: 809.
22 Staff of the Subcommittee on Reports, Accounting and Management of the Senate

Committee on Government Operations, "The Accounting Establishment: A Staff Study."
1977. Journal of Accountancy 143 (March): 108-lII.
25 U.S. Senate Banking, Housing & Urban Affairs Committee. 1976. Report to the

SEC: Ouestionable and Illegal Payments and Practices Washington, D.C.: U.S. Govern-
ment Printing Office, (May): 68-69.

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	The Audit Committee's Role Regarding the Provisions of the Foreign Corrupt Practices Act