Disconnect in policy and practice exposes Singapore companies to fraud and corruption risks
- Lack of management communication and training on anti-bribery and anti-corruption (ABAC) policies
- Missed opportunity in using technology for mitigating fraud risks
Singapore, 1 October 2013 – A majority 59% of executives in Singapore said that their companies’ ABAC policies are good in principle but do not work well in practice, falling behind the Asia-Pacific average of 48%. This is according to EY’s first Asia-Pacific Fraud Survey titled “Building a more ethical business environment”.
“While Singapore appears well-placed structurally to deal with fraud, bribery and corruption, with just a few of the respondents saying that bribery and unethical behaviors are widespread in the country, there is still a gap between the regulatory framework and companies effectively implementing this in practice,” says John Tudorovic, Fraud Investigation & Dispute Services Partner at Ernst & Young LLP.
He further highlights some naivety towards overseas risk, given that only 17% of Singapore respondents, compared to over 35% in Asia-Pacific, acknowledged that planned investments in new markets will expose the company to new risks.
The lack of regular training and management commitment to ABAC policies are also cause for concern. Only 18% of Singapore respondents said that their management has strongly communicated their commitment to their ABAC policy, compared to the Asia-Pacific average of 35%. Further, only 14% of respondents reported that they have received annual training on their ABAC policies, compared to the Asia-Pacific average of 27%.
Lawrance Lai, Fraud Investigation & Dispute Services Partner at Ernst & Young LLP adds: “A consistent and clear tone at the top and employee education must go in hand with a robust anti-fraud and compliance plan that incorporates whistleblowing schemes and technology such as forensic due diligence to monitor transactions in mergers and acquisitions, and forensic data analytic techniques to detect fraud.”
The survey revealed that while 71% of Singapore companies (lower than the Asia-Pacific average of 81%) said they would be prepared to use the whistleblowing procedure, only 17% actually operate such a scheme. Also, just over half (54%) use technology, such as transaction monitoring or forensic data analytics in their compliance. The most popular options for anti-bribery and anti-corruption compliance monitoring are still through internal audits (61%) and external audits (59%).
In fact, Singapore respondents viewed stronger government regulations and stronger internal audit teams as the two best proactive measures. Only 7% of Singapore companies said that the use of technology was the best way to proactively detect fraud
Tudorovic believes that many companies are missing out on the opportunity to proactively use technology to its full capacity to mitigate fraud risks. “IT investments in most Asian countries are still seen as a cost and burden rather than a tool that can create valuable insights into the company’s operations. However, many compliance functions will find it challenging to cope with the enormous volume of data generated internally and by third parties in today’s environment, particularly for companies with cross-border businesses, without the use of technological tools,” he adds.
The polled respondents also believe that compliance and anti-fraud measures can fall by the wayside when market conditions are volatile or challenging, with 27% of Asia-Pacific respondents – and Singapore respondents to a lesser extent (11%) – agreeing that company management is likely to take shortcuts to meet targets in harsh economic conditions.
Lai concludes: “The last few years have shown us that companies need to focus on compliance during tough times. Yet, during such times, cost may be a concern and many question the spending on compliance programs. If companies really want to look at ways they can reduce their exposure to fraud and corruption, they should be looking at it as an ongoing priority and addressing it holistically and proactively across all levels of the organization.”
To download a copy of the survey, visit 2013 Asia Pacific Fraud Survey.
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About the survey
The Asia-Pacific Fraud Survey is commissioned by EY and carried out by Asia Risk who polled over 600 working level staff and senior executives from March to May 2013 across the Asia-Pacific area including Australia, China, Indonesia, Malaysia, New Zealand, Singapore South Korea and Vietnam. The polling sample was designed to elicit the views of staff with responsibility for tackling fraud, bribery and compliance matters at multinational corporations, domestic companies and state owned enterprises across sectors, including Oil and Gas, Financial Services, Technology, Private Equity, Retail, Hospitality, and Mining and Minerals. A copy of the survey is available at ey.com.
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