2014 Global Fraud Survey

Strong engagement required of leadership

Reinforcing the commitment to ethical growth

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Strong engagement from the organization’s leadership should drive a dynamic approach to managing the risks.

An approach to compliance that is focused only on managing the legal and regulatory risks is unlikely to effect lasting behavioral change in the business. What our results show is that companies still have more to do.

"While it matters a great deal if a company has a strong code of conduct and anti-corruption program....it is equally important how vigorously and effectively these are implemented" — Cobus de Swardt, Managing Director, Transparency International

Assessing the risk — what you see depends on where you sit

CCOs — hoping for the best in people?

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Q: For each of the following, can you tell me whether you think it applies, or does not apply, to your country or industry, or whether you don’t know?

This apparently lower estimation of the threat of bribery and corruption by compliance executives is surprising. Given their focus, we expected these individuals to have a heightened sense of the risks. It is possible, however, that those who are closer to the risks in practice have a more realistic view.

The conclusion that boards and senior management should draw is that an assessment of the risk needs to involve a wide range of functions and business units. This is also borne out by our respondents who see better collaboration between legal, compliance and internal audit as something that would improve the effectiveness of the compliance function.

Making this happen in practice is easier said than done. But robust and productive interaction between these very different teams is a key step toward keeping compliance focused on the right priorities.

Learn from those most exposed — and focus resources

Compliance efforts need to focus on teams most exposed to risk. Our survey results show this is not always the case.

ABAC training, for example, is more likely to be attended by executives in mature markets, where corruption is perceived to be lower, than in higher-risk emerging markets. Of the survey population, 58% of respondents in developed markets had received ABAC training, compared with just 40% in emerging markets.

This disparity indicates the significant challenges companies face in delivering such training. The costs and time pressures of integrating newly acquired entities may have limited how applicable and understandable the training is to each market. However, given the potential risks, boards should commit the necessary resources to secure equal commitment across all markets.

Transaction forensics — managing risk, identifying deal breakers

Businesses understand that transactions can represent a high-risk area in relation to bribery and corruption. FCPA enforcement cases alone demonstrate the significance of this risk. Yet nearly 40% of businesses never conduct forensic or anti-corruption due diligence as part of their mergers and acquisitions processes.

Promote and incentivize ethics

Businesses need to do more than implement a whistleblower hotline to promote and incentivize ethics. But nearly half of the businesses in our survey do not have a hotline in place, so this is an essential starting point.

Whistleblowing – issues not being heard

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Q: Which of the following systems or processes does your organization have for monitoring compliance with ABAC laws? Whistleblowing hotlines

Whistleblowing – issues not being heard


EY infographic showing  monitoring compliance activities for companies across global markets

Q: Which of the following systems or processes does your organization have for monitoring compliance with ABAC laws? Whistleblowing hotlines

Base: All respondents (2,719); developed markets (1,103); emerging markets (1,616) The “don’t know” percentages have been omitted to allow better comparison between the responses given.

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Boards should be asking the business how else they are promoting and incentivizing ethical behavior.