New findings published by Big Four accounting firm EY (formerly Ernst & Young) in its 13th Global Fraud Survey show concerning levels of perceived fraud, bribery and corruption across the world. According to EY, the survey included in-depth interviews with more than 2,700 executives across 59 countries, including chief financial officers, chief compliance officers, general counsel and heads of internal audit. Nearly 40% of all respondents believe that bribery and corruption are widespread in their country.
Perhaps even more alarming than that, however, is the apparent disconnect the study shows among the business leaders who were surveyed. Even with the consensus that threats such as cybercrime are increasing, nearly half (48 percent) of them “considered it to represent a very or fairly low risk to their business.”
That's not a huge surprise to those of us working in the anti-fraud field. Fraud is always considered “somebody else's problem” and “it couldn't happen here” for many business leaders around the world. When it does occur, companies often find that the controls they had in place, if any, were exceedingly inadequate or ineffective in stemming the damage caused by fraud.
According to EY's press release, “the survey also found that compliance fatigue within businesses appears to have set in at a time when they can least afford it. In a regulatory environment in which international cooperation is becoming more frequent, our respondents described a largely static internal compliance environment,” as detailed here:
One in five businesses still do not have an ABAC policy
45% of organizations have not introduced a whistleblowing hotline
Less than 50% of respondents have attended ABAC training
Less than a third of businesses are conducting anti-corruption due diligence as part of their mergers and acquisitions process.
The corruption trends are increasingly worrisome. According to the report, the executives themselves are being confronted with corruption issues, even on a personal basis: “Twenty-one percent of CEOs said that they had been approached to pay a bribe in the past, compared with 10% of all C-suite interviewees... Worryingly, given their role in setting an ethical tone from the top, a significant minority (11%) of CEOs considered misstating financial performance to be justifiable in order to help a business survive an economic downturn, compared with 6% of all respondents.”
Let that sink in for a moment. The business leaders we are trusting to set the tone and enforce an ethical workplace among their employees, contractors and business partners are themselves being tempted to engage in fraud.
The entire report is worth reading, and it's important to reflect on the results. Only by making a concerted effort to keep fraud and corruption at bay – through proactive controls, prevention and detection – will these trends be reversed. It's a global battle, and every business leader needs to be on the right side, partnering with experts who can help them protect their company and their investments.