2014 Global Fraud Survey

Six key elements of leading practices

Reinforcing the commitment to ethical growth

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However much effort, energy and expertise a business brings to bear on the risks of unethical behavior — fraud, bribery and corruption are unlikely to disappear.

Our survey results over the past 10 years point toward a structural level of unethical and illegal conduct whose impact businesses must seek to minimize. This means being able to detect, investigate and remediate the actions of individuals within their organization who are prepared to act unethically.

Reflecting on our research and our experience serving clients around the world across a wide range of industry sectors, below are some key elements of leading practices.

EY - Board engagement

Board engagement

Boards need to appropriately challenge management regarding the quality and frequency of their risk assessments, particularly around new risks like cyberfraud/cybercrime. Board members can push the company to foster better collaboration between legal, compliance and internal audit, and they should request regular updates from management regarding fraud, bribery and corruption risk.

EY - Big data

Big data

Mining big data using forensic data analytics tools can improve compliance and investigation outcomes and can help management provide useful summary information to the board.

EY - Anti-corruption  due diligence

Anti-corruption due diligence

Such specialized due diligence should be the norm, not the exception. If conducting such work pre-close is not possible, then doing robust post-close procedures is essential given that the company may own the liability for illegal acts if not identified and disclosed to regulators in a timely manner.


EY - Escalation  procedures

Escalation procedures

Companies should have clearly defined escalation procedures, whether to respond to a whistleblower or a cyber incident, to minimize the damage being done and to speed the process of board notification. And, when necessary, they should consult with outside legal counsel, forensic accounts and IT security professionals.

EY - Training

Training

Companies should have ABAC training programs tailored to general job functions and levels of seniority. The training should be offered in local language and should include a mix of classroom and other online/video components. Participant information should be tracked, and business unit leaders — including those in foreign locations — should be evaluated on participation levels. C-suite executives need to lead from the front on training and cannot be exempt from it. Board members too should be trained.

EY - Budget  support for internal audit and compliance functions

Budget support for internal audit and compliance functions

While the business needs to own the risk, internal audit and compliance play essential roles in both improving standards of business conduct and in keeping the company out of trouble.

Companies, their boards and other stakeholders would be well served to deliver on these important priorities. With more focus on driving revenues from less mature markets, the challenges for companies are getting more complex. At the same time, regulators are working together across borders like never before to hold companies and their executives to account. The time is now to reinforce the commitment to driving ethical growth.