“Strong rules. Zero tolerance. You pay a bribe; you’re fired.” - Survey respondent, US
Driven by market uncertainties and declining economic growth forecasts, many companies are struggling to maintain margins. Even rapid-growth markets are feeling the effects of a weakened global economy.
In this environment, our 12th Global Fraud Survey’s findings are a further cause for concern.
Growing markets, growing risks
Globally, 39% of respondents reported that bribery or corrupt practices frequently occur in their countries. The challenge is even greater in rapid-growth markets, where a majority of respondents believe these practices are common.
Hard times strain ethical standards
One of the most disturbing findings of the survey is the widespread acceptance of unethical business practices. Respondents are increasingly willing to make cash payments (15% versus 9% in our last survey) and misstate financial performance (5% versus 3% in our last survey) to survive an economic downturn.
A weak control environment
Despite the risk, companies are still failing to do enough to prevent bribery and corruption. Management is giving mixed messages, with the overall tone often diluted by a lack of widespread training and a failure to penalize breaches. As many as 42% of respondents had not received training on anti-bribery/ anti-corruption (ABAC) policies.
Seeking an independent view on compliance
External audits were identified as a tool for monitoring ABAC compliance by 75% of respondents. Also, 33% of respondents use regular reviews by external law firms or specialist consultants.
A recently issued German assurance standard sets out a framework by which an external firm can review and offer an opinion on the effectiveness of such systems. This standard is being voluntarily adopted by a growing number of German listed companies. Other companies may find its principles a useful roadmap for maintaining an effective compliance program as they enter new markets.
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