One in five employees aware of financial manipulation in their own company
Luxembourg, 7 May 2013
- EY’s survey of over 3,000 employees in 36 countries across EMEIA highlights that one in five respondents are aware of financial manipulation in their own company in the last 12 months
- 42% of board directors and senior managers are aware of irregular financial reporting in their company
- 57% believe bribery and corruption are widespread in their country
Findings from EY’s 2013 Europe, Middle East, India and Africa (EMEIA) Fraud Survey, Navigating today’s complex business risks, show that one in five employees surveyed are aware of financial manipulation in their own company in the last 12 months. This awareness increases to over a quarter of respondents in rapid-growth markets. At board and senior manager level the proportion is higher still; more than 40% of those asked said that sales or costs had been manipulated at their company.
The survey also found that 38% of all respondents believe companies within their jurisdiction overstate their financial performance. Almost half the respondents in rapid-growth markets agree that companies in their countries often misrepresent financial performance, compared with 29% of those with headquarters in Western Europe.
Gérard Zolt, Fraud Investigation & Dispute Services leader at EY Luxembourg says, “Given the current challenging market conditions, companies face sustained pressure to meet growth and profit expectations. In this environment, some inevitably succumb to unethical behavior. Shareholders expect management to take responsibility for protecting the business by implementing anti-bribery and anti-fraud programs at all levels of their organization. Boards must challenge management to ensure they are focused on high risk areas.”
Bribery and corruption prevalent across business sectors
The survey shows the risks of misreporting are compounded by an unethical business environment. Fifty-seven percent of all respondents believe bribery and corruption are widespread in their country, which rises to 67% in rapid-growth markets. The proportion dropped however, to 26% who feel it is common to use bribery to win contracts in their own sector.
Gérard Zolt says, “To effectively tackle the risks from fraud, bribery and corruption, management need to acknowledge it could happen in their own organization and profession. The survey reveals a worrying trend that employees see bribery and corruption happening widely in their country but do not acknowledge it as a risk in their own business or sector. The results seem to say: ‘Everyone else is doing it, but not me or my business.’”
Compliance perception gap between management and employees
While the majority of respondents are aware that their company has an anti-bribery/anti-corruption (ABAC) policy, the survey shows many organizations have a significant perception gap between senior management and employees when it comes to the relevance and effectiveness of this policy. Sixty percent of directors and senior managers believe that their company would support people who reported cases of suspected fraud, bribery or corruption, whereas only 34% of other employees agree.
Critical business functions continue to question the importance of such programs. For example, just under half of respondents in the sales function either do not consider their organization’s ABAC program relevant to their role, or are not even aware of its existence.
Gérard Zolt concludes, “While companies are focused on cost, compliance can be an afterthought for some organizations. Many incorrectly assume that the mere existence an anti-bribery program is sufficient to mitigate their risk. Companies must ensure the program is communicated effectively, employees are trained adequately and it is continuously monitored and updated. Our experience also shows that leaders of organizations that successfully manage the risk of fraud, bribery and corruption ask the difficult questions and demand answers, particularly about the financial reports they receive”.
About the survey
Between November and December 2012, our researchers – the global market research agency Ipsos – conducted 3,459 interviews by telephone, online or in person with employees of large companies across 36 countries in Europe, the Middle East, India and Africa to gauge their views on fraud, bribery and corruption.