Upload
archchana-vekneswaran
View
83
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Would the Balanced Scorecard have helped in recent financial scandals?
Citation preview
CIMA Financial Management
Would the Balanced Scorecard have helped?
Miss Archchana Vekneswaran - 12501207
Individual Assignment – Accounting and Management Control Systems
Date of Submission: 4th March, 2013
Submitted in partial fulfillment for the degree of
Bachelor of Arts (Hons) Sustainable Performance Management
Word Count: 2193
| March 2013 1
Would the Balanced Scorecard have helped?By: Archchana Vekneswaran
Overview
ue to significant changes in technology and product proliferation (Wongrassamme et al,
2003, p.14), companies started to evolve from being domestic to multinationals and into
global corporations (Dyment, 1987, p.20). During this process they had to find ways to achieve
sustainable competitive advantages in the volatile market by establishing proactive internal
controls and continuous performance improvements to suit the changes in each strategic business
units across national borders to match the global strategy (Wongrassamme et al, 2003, Lee &
Colbert, 1997 and Dyment, 1987).
D
BBC (2012) reported that “a number of scandals have engulfed the global financial
system” and various banking institutions are under investigations and scrutiny by regulators. As
Merchant & Van der Stede (2007, p.3) and Dyment (1987, p.20) argue, failed management
controls could bring in collateral damages like reputation risks and bankruptcy. Therefore
companies had to invest in methods which could provide higher return on investment (Ghalayini
and Noble, 1990 cited in Wongrassamme et al, 2003, p.14). One such model is Kaplan and
Norton’s “Balanced Scorecard” (BSC) – which celebrates its 20th anniversary. The following
article discusses about the model and the part it could have played in mitigating recent banking
scandals.
Balanced Scorecard Model
In their multi company study in 90s, Kaplan and Norton introduced balanced perspective to
performance management by introducing their popular model BSC (Fig 1 & 2) for the companies of the
information age (Kaplan and Norton, 2001, p.2) where performance could be measured through leading
and lagging indicators. They argued that focusing mainly on financial targets was encouraging
short termism while hindering the future earning potential of those companies hence becoming
obsolete (Kaplan and Norton, 2001, p.2). Furthermore, they stated that by having a balanced
view would provide instrumentation to achieve competitive advantage and thereby navigate
towards strategic objectives (Kaplan and Norton, 2001, p.3).
AMCS Unit Assessment - MMU
Balanced Scorecard - one of the versatile models – could have helped the global organizations such as HSBC and Barclays to avoid recent scandals and to drive towards corporate targets with
enhanced controls and sustainable performance management solutions.
| March 2013 3
Source: Kaplan and Norton (1992, p.9) cited in Google Images (2012)
Figure 2: Critical Dimensions of BSC
Source: Kaplan and Norton (1994) cited in Davies (2007, p.2)
The BSC model is being used by 70% of the companies worldwide (Hickman, 2012)
including 50% of fortune 1000 firms (Davies, 2007, p.1). According to Hickman (2012), “The
key to its longevity and popularity has been its ability to adapt and provide solutions to changes
in the broader economy”. However, the benefits could only be achieved on the basis of what is it
used for, how well are they designed and how well were they been applied into the business
(2GC Limited, 2008, p.2). Global firms find it difficult to implement sound internal control and
performance measures. Such issues and how BSC could address these issues are discussed
below.
Difficulties in establishing effective controls and performance management in
global organizations
Maznevski et al (2007) exhibited four main complexities that lead to these control PM issues
in global firms:
AMCS Unit Assessment - MMU
Figure 1: Balanced Scorecard Model
| March 2013 4
Diversity
Global organization such as HSBC and Barclays face diversity from internal and external
sources where the management finds it difficult to manage each business unit in the similar way.
From the internal perspective, due to internationalization management of HR pool has to be
unique (Maznevski et al., 2007, p.1). Moreover, the ways in which each business unit achieves it
financial or corporate targets are different. There could be complexities in integrating managing
different management systems. External environment imposes diversity in terms of heterogenic
customer requirements and variation on stakeholder claims, diverse political, legal and
technological environment and varying degrees of competitor strategies (Maznevski et al., 2007,
p.1). Devising management controls while absorbing the diversities is difficult and the factors
are volatile in nature.
Interdependence
When the companies operate across borders interdependence increases to a greater extent where
each and every aspect of the business becomes related (Maznevski et al., 2007, p.2). Value webs
have replaced the value chains and other aspects of the business such as reputation, financial
flow, top management and corporate governance issues have reached their maximum while
erasing the boundaries of a company (Maznevski et al., 2007, p.2). Furthermore these issues
increase the reliance on each other and exposed companies such as HSBC to issues on frictions,
negative trends, loss in share price etc imposing difficulties in managing the companies in
effective manner (Maznevski et al., 2007, p.2.).
Ambiguity
Maznevski et al (2007, p.2) says “The business world today is characterized by too much
information with less clarity on how to interpret and apply insights”. Diversity in financial
standards along with studies surveys, scenarios etc. becoming less reliable due to volatile
business world, made the numeric figures and business forecasts ambiguous due to uncertainties
(Maznevski et al., 2007, p.2.). It is also found that many companies find it difficult to identify the
core value drivers of their existence making the cause – effect relationships less useful
(Maznevski et al., 2007, p.2.).
Flux
AMCS Unit Assessment - MMU
| March 2013 5
If the managers find ways to resolve above issues, the situation of business could change on the
very next day where the solution becomes outdated (Maznevski et al., 2007, p.2.). Companies
have to have ongoing monitoring process to continuously devise strategies to match the existing
control gap in organizations.
Lack of credibility
Supervisors of global workforce find it difficult to monitor all the staff to measure the
performance. Lack of knowledge, expertise, and understanding of the global context and poor
credibility of the feedback has diluted the effectiveness of PM (Rowley and Poon, 2009, p.1).
Furthermore, employees have to report to various superiors such as headquarters, country
manager, regional manager etc. has increased the challenges (Rowley and Poon, 2009, p.1).
Standardization of PM and national culture in workplace
Many organizations tries to standardize the PM systems across countries where the effectiveness
could be influenced by factors such as cultural differences, institutional isomorphism, global
integration V global adaptation, risk attitude etc. which questions the effectiveness of
standardized PM solutions (Rowley and Poon, 2009, p.2).
Above factors form the reasons behind why an effective control and PM system couldn’t be
established in global organizations like recent banking scandals. Could BSC have help to manage
the above issues while avoiding the scandals if it was implemented in the above banks? The
following section analyses tries to answer the above question.
Recent Banking Scandals and Failed Controls – A Recap
Money Laundering and Terrorist Financing– HSBC
The global banking giant HSBC is operating since 1865, with 89 million customers
across 85 countries (Dailymail, 2012). Today, a bank with such a long history has failed to
maintain sufficient Anti Money Laundering (AML) controls indicating insufficient awareness
over the ethical and lawful transactions (HK company law blog, 2013).
AMCS Unit Assessment - MMU
| March 2013 6
As per the Homeland Securities and Government Affairs (2012), “HSBC compliance
culture has been pervasively polluted for a long time” and analysts propose that “HSBC is too
large to manage in an effective manner” (HK company law blog, 2013). The US Senate
Committee reports that HSBC was guilty on following grounds:
Source: Compiled by Author based on US Senate Committee Repot (2012)
Due to above scandals HSBC was imposed with fines worth $2 billion, and a downgrade
on standards and poor outlook (BBC, 2012). It should be noted that having a proper AML
program incorporating AML internal controls, AML compliance officer, AML training and
independent testing on the AML program’s effectiveness would have prevented the bank from
facing legal consequences (US Senate, 2012). Financial Crisis Inquiry Commission (FCIC)
strongly believes that the crisis was mainly due to “human mistakes, misjudgments and misdeeds
that resulted in systemic failures” (Sathye, 2012).
AMCS Unit Assessment - MMU
Figure 3 : HSBC Scandals
| March 2013 7
Manipulation of LIBOR – Barclays
With over 300 years of history of banking (Barclays, 2012), Barclays was one of world’s
renowned brands of all time. However, the corporate image was tarnished by consequences of
recent LIBOR rate rigging scandal and socked with $453 million to UK and USA regulators
(Business times, 2012). It was proved that the bank was involved in producing false reports to
manipulate the interest rate (LIBOR) to increase its profits in collusion with some other top
banking firms (Business times, 2012).
LIBOR rate was used to set
transactions worth $300 trillion
(BBC, 2012). Hence, the rate
should have been backed by
hard data on market factors
instead of falsified assumptions.
But poor accountability
framework of Barclays lead the
traders find loopholes in the
systems and to fix the rates in
collusion with traders of other
banks (Financial times, 2012)
during 2008 at the verge of
financial crisis (Fig 4). The governor of Bank of England says, “The idea that one can base the
future calculation of LIBOR on the idea that 'my word is my LIBOR' is now dead” (BBC, 2012)
as regulators have restored rigid monitoring process over banks.
BSC – Would it have helped to address these challenges?
BSC would have definitely helped to mitigate most of the control and performance measures
related issues and thrive toward long term sustainability in the markets in which they operate.
Initially author wishes to highlight how BSC could have addressed the challenges mentioned
above in implementing sound internal control and performance management solutions in global
firms.
AMCS Unit Assessment - MMU
Figure 4: Barclays LIBOR rate rigging
Source: Bloomberg cited in BBC (2012)
| March 2013 8
Diversity Management (DM)
According to Schmidt (2012), DM “involves the consideration and appreciation of diversity as
well as the active use and promotion of diversity to increase the economic success”. This helps to
match the differences and similarities in terms of strategic objectives of the company. Inclusion
of diversity in mission statement was highly appreciated by global work force and has resulted in
reduced absenteeism motivation and productivity (Schmidt, 2012). Few questions that could
become BSC controls related to DM are as follows (Schmidt, 2012):
Financial perspective: What are the costs of non- introduction of DM measures?
Customer perspective: How many diverse customer groups does the company serve?
Process perspective: What % does diversity contributes in profit generation and cost
cutting?
Staff and innovation perspective: How diversity has improved the productivity? How
many new innovations were proposed by diverse work teams?
Proactive promotions and cultural diversity appreciation has improved the learning and sharing
among heterogeneous groups and lead to innovations (Schmidt, 2012). It has helped many global
firms to address complex problems. But BSC alone would not ensure diversity but it should be
jointly used with other comprehensive DM models such as outcome mapping (Schmidt, 2012).
Internal Benchmarking (IB)
It is identified that interdependence of business units has imposed significant challenges. One
best way in which BSC could help global firms to resolve the challenge is by carrying out
internal benchmarking practices where one subsidiary in one destination is compared against the
best subsidiary of the specific global company. This balanced review on performance would
highlight the issues in subsidiaries and would help to decide solutions to be implemented to
reduce or avoid the existing issue in the subsidiary. For example, banking industry in Sri Lanka
is heavily regulated and monitored by Central Bank of Sri Lanka. So, HSBC USA could
benchmark its statutory controls against HSBC Sri Lanka.
Addressing ambiguity and flux
BSC could be implemented along with IT solutions which could be regularly updated with
external environment factors which could affect the performance of the global company. In this
way BSC could have helped to endure that the information is up to date and makes the forecasts,
AMCS Unit Assessment - MMU
| March 2013 9
controls and PM more reliable and less ambiguous. This BSC model could help to arrive at cause
and effect relationships which would help to identify the issues behind BSC perspectives and to
make informed decisions based on reliable sources.
Better PM feedback and learning
BSC helps the top level managers to identify how they could address the challenges enforced by
external environment. If a company couldn’t achieve its established targets then BSC requires
top management to look in the organizations resources and capabilities and establish necessary
measures to suit the new strategies. This process would act as a feedback loop to support
decision making at all levels (Procurement Executives Association, n.d).
It is essential to be noted that HSBC was using BSC to measure the performance of the
senior management says HSBC sustainability report 2007 which is known as an executive BSC
which is only a part of establishing a complete BSC program (Creamer and Freund, 2010,
p.366). However BSC program was not in place at Barclays. BSC could have helped in
following ways in avoiding banking scandals:
Positive change in management focus
HSBC and Barclays evaded most of the mandatory regulatory requirements due to short term
focus of the management to earn quick profits. Bruce (2012, p.18) states that corporate leaders
like a politician, see them in power for a shorter period of time and tries to focus on initiatives
that gives short term profits rather than sustainable longer term profitability. BSC encourages
management to switch focus on long term strategic objectives rather than shorter time horizon.
BSC has strategy at its core and could have helped the banks to focus on future rather than today.
Establishment of performance culture
A common criticism over the banking scandals is
that the corporate culture is polluted to a greater extent.
BSC would support the management to enhance a
strategy oriented performance culture throughout its
operations.
Treanor (2004) says that banks could deploy
diverse rewards systems whereas sales were the only angle of HSBC. When BSC implemented,
AMCS Unit Assessment - MMU
“The beauty of BSC is that the act of measurement forces somewhat vague and ambiguous concepts such as culture to be defined precisely”
Kaplan and Norton (2004)
| March 2013 10
US and European subsidiaries would change their focus to other strategic indicators their
respective business (Mooraj et al, 1999, p.483) rather than short term preferences. This attitude
could have been changed by performance driven culture imposed by BSC. Due to the switch in
culture, the attitude towards innovation, collaboration and teamwork, rewards and incentives,
risk attitudes etc would change favourably and align employee performance to strategy of the
banks.
Enhanced performance management
BSC would have helped to move from performance measurement to performance management
(Procurement Executives Association, n.d). Senior management would get involved in the
process of developing PM systems which are linked to company’s achievement of four key
perspectives as per BSC and strategy at the end. Employees would get better understanding on
what they should and should not do to reach the set targets. Employees who reached the target
could be awarded with monitory or non-monitory rewards as token of appreciation. By this the
rewards would be aligned to the overall strategy of the banks.
BSC would also improve the accountability of the staff as they gain a sense of ownership
when individual attainment of target helps the organization in achieving the corporate targets.
However, the individual should have required skills and should be given with necessary authority
to perform their targets to remain accountable. In the context of HSBC, certain compliance
division consisted of inexperienced divisional heads and staff without authorities to handle their
duties (US Senate, 2012) which indicate that HR policies should be adjusted first to reap the
benefits of accountability.
Better control environment
Both companies under review has suffered poor control environment as indicated by the
failed controls. BSC consists of 3 control mechanisms which help the management to keep track
of the day to day operation of the banks as indicated in Fig 5 below.
Interactive control systems enable the management to conduct 3600 feedback control over the
activities and to interact with the related parties such as customers and staff to ensure controls are
in place and to make necessary changes (Mooraj et al., 1999, p.486). If this was in place HSBC
could have avoided terrorist financing activities and Barclays could have mitigated risks of
falsified reports used for rate rigging.
AMCS Unit Assessment - MMU
| March 2013 11
Diagnosis lagging controls would have helped to trace whether necessary objectives were
reached as expected without any irregularities. This might have helped to trace financing
activities from Mexican HSBC and analyze into sources to avoid money laundering.
Boundary controls ensures that all the employees are very familiar with the intended
objectives and vision of the banks which could have eliminated the sub optimization due to self-
interest prioritized over the company’s strategies especially in the case of Barclays where traders
acted in misconduct to raise their bonuses through rate rigging mechanisms.
K ey Performance Indicators (KPI) and internal audit
BSC could act as a system to generate key performance indicators and ratios while balancing
the four perspectives of corporate strategy (Kagermann et al, 2008, p.527). In this case BSC
would assist in developing KPIs relating to AML controls and other general banking initiatives.
It was found that HSBC has AML issues in terms of dysfunctional systems, 17,000 unattended
risk alerts, inadequate staffing in compliance division, improper risk assessment techniques and
lost suspicious activity reports (US Senate, 2012).
In that case, “learning and growth” perspective would help to attain long term organisational
growth through three sources such as people, systems and procedures (Business Excellence,
2013). To overcome AML deficiencies re-skilling of employees, investing in IT solutions and
improving the organisational procedures would have helped to close the gaps in controls
(Business Excellence, 2013).
AMCS Unit Assessment - MMU
Figure 5: Control systems of BSC
Adopted from Mooraj et al (1999, p.486)
| March 2013 12
Criteria Indicator KPI Description
Staff training Amount of
training on
AML
No of training
sessions
This is a legal requirement
Compliance Reports to
authorities
No of reports Preparation of reports to governing
authorities and reports leading to
prosecution
Management
of AML
effectiveness
Comparison of
AML controls
per reqirement
Number of updates
and checking on
AML effectiveness
Qualitative reports and numeric assessments
has to be conducted
Table 1: KPIs for AML controls
Source: Adopted from Schoenbein et al (2001)
Due to comprehensive nature and integration of qualitative measures, BSC could accelerate
KPI based internal audit (Kagermann et al, 2008, p.528). Internal audit is one of the statutory
requirements for any registered company which indicates that KPI based internal control issues
could have been tracked in the case of banking scandals.
Enhanced risk management
It is visible that poor risk management in the organizations has also lead the companies
towards legal consequences due to events such as negligence of alerts, knowingly producing
false reports, poor client checks which lead to drug money laundering disputes and evading laws
and regulations etc.
BSC would have helped the top management to develop strategic maps where each input,
process and outcomes of every move of the company is clearly defined (Frigo, 2012, p.52). Then
the management could be able to identify “strategic risks” associated with each and every
component after which these risks elements could be placed in a 2X2 risk map by giving scale
based on likelihood and severity (Frigo, 2012, p.53). By this management could identify and
devise plans to mitigate the risks. The above control could have enhanced the control
environment of the banks under review and would have satisfied one of the requirements of
Sarbanes Oxley Act USA by ensuring a sound control environment which would have mitigated
certain control issues.
AMCS Unit Assessment - MMU
| March 2013 13
BSC as a self-diagnosis tool accompanied by strategic maps treats risk management as senior
management’s responsibility rather than compartmentalizing risk areas into functional categories
(Frigo, 2012, p.53). This practice would have enhanced comprehensive integrated process of risk
management process (Frigo, 2012, p.53) across the organization and to establish sophisticated
risk control to avoid irregularities and to protect the corporate reputation.
Benefits vs. Limitations of BSC
Some additional benefits of adopting BSC as control and performance measurement tool are
discussed below:
BSC requires active involvement of the users throughout its designing process which makes
the framework more comprehensive (2GC Limited, 2008, p.2) thus would improve stakeholder
confidence due to transparency in reporting and would also improve the corporate governance
dimension (BSC Institute, 2012, p.1).
Due to immense competition in today’s business world, it is essential for a company to focus
and invest in intangible intellectual sources such as research and development, IT technology,
branding and persuasive marketing initiatives (Pandey, 2005, p.64). As BSC’s leading indicators
provide logic to achieve these intellectual assets it would help the banks drive towards the future
and sustain in their respective markets (Pandey, 2005, p.65). BSC links three leading indicators
which are hard to manipulate due to intangible nature and day to day monitoring hels to avoid
window dressing.
Having analyzed the benefits of the model, it should also be noted that the model consists
of certain limitations which has to be considered.
1. Requires change management
BSC implementation process is a transformational change initiative where long term
commitment has to be required in terms of generating metrics to measure performance.
Employees have to be educated and should be trained to adapt to BSC environment. This is
timely and expensive (Murphy and Gould, 2005, p.24). Employee resistance to such significant
change by which their performance are going to monitored, conflicts within the organizations
which might end up conflict of interest dilemma.
AMCS Unit Assessment - MMU
| March 2013 14
2. Key personnel change would question the sustainability
BSC requires significant involvement from the top management when implementing and
reporting the findings. Key personnel would also determine underlying principle and how the
performance is going to be managed (Murphy and Gould, 2005, p.25). If there are any changes in
the top management, BSC initiatives can falter if the new management has totally different view
on performance evaluation. So it is essential to ensure that the new management is not deviating
from company’s original initiatives towards BSC (Murphy and Gould, 2005, p.25).
3. Inward Focused
It should also be noted that inward focused measure (Murphy and Gould, 2005, p.26). It avoids
integrating changes in the external environment such as in SWOT or PESTEL measures.
4. Difficulties in establishing linkages
Another criticism on the BSC is that it is difficult to establish linkages between the four
perspectives put forward by Kaplan and Norton (Murphy and Gould, 2005, p.25). There could be
unidentified time lags between the actions taken and results generated while trying to create
linkage between financial and non-financial measures and this would be pointless when devising
decisions (Murphy and Gould, 2005, p. 25).
5. Other limitations
Most organizations try to implement BSC simply because their competitors are doing it. This
would erode the popularity of the model because every company is unique and requires well
built in performance metrics. Furthermore, if departments (marketing, HR etc.) are allowed to
devise their own BSC measures based on what they know well it would lead to lack of goal
congruence as the measures would not lead the overall company towards the corporate strategy
but only the departments to reach individual targets.
It is evident that BSC could act as a useful tool if carefully devised. However, global
firms face tremendous pressures and complexities in implementing such sound measures to
control the performance and to keep the company on the path to reach the corporate objective.
AMCS Unit Assessment - MMU
| March 2013 15
Recommendations
In order to attain the benefits from BSC author recommends global firms to adapt to risk
based IT driven BSC systems in their operations. This BSC is also known as 4 th generation BSC
(Tomura, 2006) which integrates internal control requirements per regulations such as Sarbanes
Oxley Act in USA, with risk elements by operating on IT platform (Fig 6). As discussed above
BSC would be a solution for most of the control and performance management concern of global
firms.
Figure 6: 4th Generation Balances Score Card
Source: Tomura (2006)
As per the above diagram, the integration of internal control and risk would help the
global organizations to address statutory as well as internal requirements where as usual BSC
itself helps to reach PM targets. KRI and KCI could be established with owners and could act as
an effective tool in internal audit programs and to trace the accountability of any failed control.
This could also act as an effective communication medium with stakeholders to ensure that
company has been undertaking regular internal control reviews which enhance transparency
(Tomura, 2006). Integration of risk aspects to the traditional BSC would enhance the detection
and rectification of risk due to the use of IT software (Tomura, 2006). Preventive measures taken
AMCS Unit Assessment - MMU
| March 2013 16
to control the irregularities would lead to Kaizen for the next period due to step by step
improvement in organisational performance (Tomura, 2006).
It should be noted that in order reach the benefits of successful BSC there are certain
prerequisites that the global firms should consider. Initially the top management should have
wide knowledge on the reason why they are implementing BSC and they should be committed
throughout the process (Pandey, 2005, p.63). This would act as a cultural control where the
management gives the impression that it is committed for better performance. Next the
companies should be able to identify what are the critical success factors (CSF) that drive the
organization’s success and clearly define metrics to suit each factor (Pandey, 2005). A best
example could be Toyota which drives through quality in each of its operations (Maznevski et
al., 2007, p.4). Companies should also have a sophisticated tracking system to measure the
performance and to enhance controls. If these prerequisites were met implementing BSC would
drive the company towards success.
As global companies are subject to complexities due to borderless operations, author
recommends if possible the management structure could be decentralized to a certain extent
where the country managers would have the autonomy to devise BSC measures that best suits
the nation’s conditions while country’s manager’s performance could be measured by regional
headquarters.
In the case of Barclays and HSBC, quick profit motive has hindered the performance of
the companies. As per Tilley (2012, p.65), “individual bonuses should be paid in equities and
placed into their pensions….. Executive incentive schemes that encouraged excessive risk taking
and short term gains directly contributed to the economic crisis”. It is essential that the
remuneration packages should be linked performance based on BSC to avoid short termism
(Pandey, 2005, p.63).
Apart from the additions to the conventional BSC model, global firms and especially the
banks should give more attention towards their recruitment policies. This is because in order
maintain good code of conduct and performance culture exceptional professionalism is required.
Even a very sound control could be evaded by collusion between individuals or institutions such
as in the case of rate rigging scandal where Barclays collided with several other firms to
manipulate the LIBOR rate. However, Barclays has decided to recruit based on good citizenship
tests and decided to redesign their compensation policies by basing them on BSC where
AMCS Unit Assessment - MMU
| March 2013 17
performance would be measured through reputation and business conduct test and client
satisfaction ratings (telegraph, 2012). This should be welcomed and sustained in future.
Individuals should also be given necessary authority to be accountable for their duties.
Failed controls in the banking scandals were due to intentional fraudulent activities. In
order overcome this, anti – fraud culture should be promoted with sound anti-fraud controls such
as segregation of duties, authorization, physical controls etc. These measures could also be
integrated into BSC framework and could be monitored on a daily basis. It should also be
encouraged to nurture whistleblowers to fight irregularities by rewarding them appropriately
(Bartram, 2012, p.36). Mystery shoppers could also be established confidentially to check the
vigilance of the front end officers.
However, it is worth mentioning that the regulatory bodies were not efficient and vigilant
enough to track the loopholes in their operations and regulations. So, the governments of
respective countries should carryout robust restructuring to their usual monitoring process to
avoid any further scandals and financial crisis which has a chain effect on all over the world.
Conclusion
As per Treanor (2012), "Capital requirements, loan ratios, buffers, and ring-fencing are
important but not sufficient to restore confidence in our banking system. We also need a fresh
approach from the banks themselves”. One such reform is BSC which ensure sound internal
controls aimed at long term corporate targets and performance measures. It was identified that
this 20 year old model holds greater insights which with slight modifications could be adopted
by any firm to retain its market position. It would have definitely been able to play a vital role in
avoiding certain global banking scandal issues.
AMCS Unit Assessment - MMU
| March 2013 18
References
2GC Active Management (2012). What are the main benefits of a balanced scorecard? [Online]. Available from: http://2gc.eu/files/resources/2GC-FAQ2-080901.pdf [Accessed: 20th December, 2013]
Amaratunga, D., Haigh, R., Sarshar, M., and Baldry, D. (2002), Application of the balanced scorecard concept to develop a conceptual framework to measure facilities management performance within NHS facilities , International Journal of Health Care Quality Assurance, Vol. 15 Iss: 4 pp. 141 – 151
Barclays (2012). About Barclays Group [Online] Available from: http://group.barclays.com/about-barclays/about-us#barclays-history [Accessed: 26th December 2012]
BBC (2012). Libor – what is it and why does it matter? [Online] Available from: http://www.bbc.co.uk/news/business-19199683 [Accessed: 20 th December 2012]
BBC (2012). Standard & Poor's downgrades outlook for HSBC [Online] Available from: http://www.bbc.co.uk/news/business-19366415 [Accessed: 25 th December 2012]
BBC (2012). Timeline: Libor fixing scandal [Online] Available from: http://www.bbc.co.uk/news/business-18671255 [Accessed: 24th December 2012]
BBC. (2012). Global banking scandals: Who is under scrutiny?. [Online] Available from: http://www.bbc.co.uk/news/business-19323954 [Accessed: 10th December 2012]
BBC. (2012). HSBC money laundering report: Key findings [Online] Available from: http://www.bbc.co.uk/news/business-18880269 [Accessed: 20th December 2012]
Bonaque, B. (2012). The List. CIMA Financial Management. September 2012. P.36.
Bruce, B. (2012). Opinion. CIMA Financial Management. September 2012. P.18.
Business Excellence. (2012). The Balanced Scorecard. [Online] Available from: http://www.bexcellence.org/balanced-scorecard.html [Accessed: 19 th January 2013]
Business Time (2012). The Barclays LIBOR Scandal Is a Clear Case for Greater Consumer Protection [Online] Available from: http://business.time.com/2012/06/29/the-barclays-libor-scandal-is-a-clear-case-for-greater-consumer-protection/#ixzz2JXWqPUMd [Accessed: 29th December 2012]
Cremer, G. and Freund, Y. (2010). Learning a board balanced scorecard to improve corporate performance. Decision Support Systems. 49 (2010) p. 365–385.
Dailymail. (2012). HSBC let drug gangs launder millions: First Barclays, now Britain's biggest bank is shamed - and faces a £640 million fine. [Online] Available from: http://www.dailymail.co.uk/news/article-2174785/HSBC-scandal-Britains-biggest-bank-let-drug-gangs-launder-millions--faces-640million-fine.html#ixzz2JXL8toQh [Accessed: 23rd December 2012]
Davies, R. (2007). The Balanced Scorecard – Panacea or Poisoned Chalice? [online]. Available from: http://www.drrobertdavies.com/071128%20BALANCEDSCORECARD.pdf [Accessed: 19th December, 2012]
Dyment,J. (1987), Strategies and management controls for global corporations", Journal Strategy, Vol. 7 Iss: 4 p. 20 – 26
Financial Post. (2012). HSBC’s ‘shameful and embarrassing’ scandal to cost over $2-billion [Online] Available from: http://business.financialpost.com/2012/07/30/hsbcs-shameful-and-embarrassing-scandal-to-cost-over-2-billion/ [Accessed: 23rd December 2012]
Financial Times (2012). Tricky lessons for the players in Liborgate [Online] Available from: http://www.ft.com/cms/s/2/666bd90e-d006-11e1-bcaa-00144feabdc0.html#ixzz2HD0GrlB4 [Accessed: 21st
December 2013]
AMCS Unit Assessment - MMU
| March 2013 19
Frigo, M. L. (2012). The Balanced Scorecard: 20 years and counting. Strategic Finance. October 2012. P. 49 – 53
Google Images (2012). BSC Model [Online] Available from: http://www.google.lk/imgres?hl=en&sa=X&tbo=d&biw=1517&bih=752&tbm=isch&tbnid=CtQ5oWz0kKLOIM:&imgrefurl=http://www.smartkpis.com/blog/2010/05/&docid=m96QPKZAcLzcHM&imgurl=http://www.smartkpis.com/blog/wp-content/uploads/BSC-concept-BalancedScorecardReview.com_.jpg&w=771&h=579&ei=F_T3UL-GF8PRrQfnrYA4&zoom=1&iact=hc&vpx=192&vpy=142&dur=401&hovh=141&hovw=200&tx=148&ty=96&sig=111948838829519768685&page=1&tbnh=141&tbnw=200&start=0&ndsp=30&ved=1t:429,r:24,s:0,i:157 [Accessed: 20th December 2012]
Hickman, A., (2012). Norton: Balanced Scorecard must adapt to remain relevant.[online] Available from: http://www.cgma.org/Magazine/News/Pages/20126794.aspx?cm_mmc=CGMANL-_-09Nov12-_-Features-_ Norton&utm_source=cgmanl&utm_medium=09Nov12&utm_term=features&utm_content=Norton&utm_campaign=cgmanl [Accessed: 4th December, 2012]
HK Company Blog. (2012). Whose responsibility? The aftermath of HSBC scandal. [Online] Available from: http://hkcompanylawblog.com/2012/11/07/whose-responsibility-the-aftermath-of-hsbc-scandal/ [Accessed: 26th
December 2012]
Homeland Securities and Government Affairs. (2012). HSBC Exposed U.S. Financial System to Money Laundering, Drug, Terrorist Financing Risks [Online] Available from: http://www.hsgac.senate.gov/subcommittees/investigations/media/hsbc-exposed-us-finacial-system-to-money-laundering-drug-terrorist-financing-risks [Accessed: 20th December 2012]
HSBC (2007). Footprint Management – Sustainability Report [online]. Available from: http://reports.investis.com/reports/hsbc_sr_2007_en/pdf_cache/hsbc_sr_2007_en_extract_20.pdf [Accessed: 19th
January, 2013]
Kagermann, H et al (2008). Internal Audit Handbook. [Online] Heidelberg: Springer. Available from: http://books.google.lk/books?id=R8kzyri7ULwC&pg=PA527&lpg=PA527&dq=internal+controls+and+balanced+scorecard&source=bl&ots=sdNT-F6QzV&sig=Bfb1SeaIHD0C-811DVlJBHtKYkY&hl=en&sa=X&ei=p6P6UPWULYjirAe4wwE&ved=0CEMQ6AEwBA#v=onepage&q=internal%20controls%20and%20balanced%20scorecard&f=false [Accessed: 10 th January 2013]
Kaplan, R. S and Norton, D. P, (1996). Translating Strategy into Action: The Balances Scorecard. [Online] USA: Library of Congress Cataloging. Available: http://books.google.lk/books?hl=en&lr=&id=mRHC5kHXczEC&oi=fnd&pg=PR7&dq=Balanced+Score+Card&ots=ww3Xz7D4Ne&sig=UH_DRaG5OlBST18GLI2g5FJM4pA&redir_esc=y [Accessed: 20th December 2012]
Kaplan, R. S. and Norton, D.P (2004), Organization Capital: Supporting the change agenda that supports strategy execution, Balanced Scorecard Report, Vol 6 Iss: 1 p.1-16
Lee,M. and Colbert,J. (1997),"Analytical procedures: management tools for monitoring controls", Management Decision, Vol. 35 Iss: 5 pp. 392 – 397
Maznevski, M., Stegar, U. and Amann, W (2013), Manageing complexity in global organisations [online]. Available from: http://www.ft.com/intl/cms/d38ba8ea-d933-11db-9b4a-000b5df10621.pdf [Accessed: 19th January, 2013]
Merchant, K. A and Van der Stede, W.A, (2007). Management Control Systems: Performance Measurement, Evaluation and Incentives. Harlow: Pearson Education.
Murby, L and Gould, S (2005). Effective performance management with balanced scorecard: Technical Report, UK: CIMA
Pandey, I.M (2005). Balanced Scorecard: Myths and Reality, Vikalpa, Vol 30 (1) p. 51 – 66.
AMCS Unit Assessment - MMU
| March 2013 20
Procurement Executives’ Association (n.d). Guide to balanced scorecard performance management methodology. [Online]. Available from: http://energy.gov/sites/prod/files/maprod/documents/BalancedScorecardPerfAndMeth.pdf [Accessed: 5th February, 2013]
Punniyamoorthy, M. and Murali, R. (2008), Balanced score for the balanced scorecard: a benchmarking tool, Benchmarking: An International Journal, Vol. 15 Iss: 4 pp. 420 – 443
Rowley, C. and Poone, I. (2012). Performance Management for a Global Workforce: Aspects and Business Implications. [Online]. Available from: http://www.slideshare.net/Jackie72/performance-management-for-a-global-workforce-aspects-and [Accessed: 5th December, 2012]
Sathye. M, (2012). HSBC’s money laundering scandal is more than just risky business practice [Online] Available from: http://theconversation.edu.au/hsbcs-money-laundering-scandal-is-more-than-just-risky-business-practice-8309 [Accessed: 24th December 2012]
Schimidt, B.V (2012). Diversity Management and Balanced Scorecard. [Online]. Available from: http://www.idm-diversity.org/eng/infothek_schmidt_scorecard.html [Accessed: 6th January, 2013]
Schoenbein, O.S, Braunschweig, A., and Oetterli, G (2001). Social performance indicators for the financial industry. [Online] Zurich: E2 Management Consulting Ltd. Available from: http://www.logro.sk/na_stiahnutie/kpis_banks.pdf [Accessed: 3rd January 2013]
Schoenbein, O.S., Braunschweig, A. and Oetterli, G. (2001). Social and Performance Indicators for the financial industry [online]. Available from: http://www.logro.sk/na_stiahnutie/kpis_banks.pdf [Accessed: 20th December, 2013]
Telegraph (2012). Barclays slashes banker’s pay upto halfas profits fall. [Online]. Available from: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9638367/Barclays-slashes-bankers-pay-by-up-to-half-as-profits-fall.html [Accessed: 6th December, 2012]
Tilley, C. (2012). CEO Column. CIMA Financial Management. September 2012. P.65.
Tomura, T. (2006). Beyond Sarbans – Oxley: Improving corporate value with a 4th generation BSC approach. [Online]. Available from: http://www.bptrends.com/publicationfiles/TWO%2012-06-ART-The4thBSCforSOX-Tomura.pdf [Accessed: 6th February, 2013]
Treanor, J. (2012). John Vickers says George Osborne's banking reforms don't go far enough. The Guardian. 14th
June. Available from: http://www.guardian.co.uk/business/2012/jun/14/vickers-george-osborne-banking-reforms [Accessed: 12 th January 2013]
US Senate (2012). U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History. Washington : Permanent Subcommittee on Investigations
Wongrassamee, S., Gardner, P.D., and Simmons, J.E.L (2003), Performance Measurement tools: The balanced scorecard and business excellence model. Measuring Business excellence, Vol 7 (1) p14-29
AMCS Unit Assessment - MMU