«EY EMEIA Fraud Survey 2013: Navigating today's complex business risks»

One in five employees aware of financial manipulation in their own company

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EY’s EMEIA Fraud Survey shows 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 but decreases greatly when looking solely at the Swiss market with only 1 in 10 employees are aware of unethical conduct occurring in their companies.

Zurich, 7 May 2013 – «EY’s 2013 Europe, Middle East, India and Africa (EMEIA) Fraud Survey: Navigating today’s complex business risks» of over 3,000 employees in
36 countries highlights that one in five respondents are aware of financial manipulation in their own company in the last 12 months. Findings from the survey show that at board and senior manager level the proportion is higher still; 42 percent of those asked said that sales or costs had been manipulated at their company, while 57 percent believe bribery and corruption are widespread in their country.

The survey also found that 38 percent 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 percent of those with headquarters in Western Europe while only 16 percent of Swiss respondents perceive that financial manipulation is prevalent in Switzerland. Michael Faske, Swiss Leader of EY’s Fraud Investigation & Dispute Services practice says: «Companies in today’s challenging market environment face sustained pressure to meet growth and profit expectations and some will inevitable succumb to unethical behavior, whether in Switzerland or abroad, whether it’s your company or a business partner. Shareholders expecting management to take ownership and to implement compliance programs is simply not enough. Boards must challenge management to ensure that they are focused on the right high risk areas.»

Bribery and corruption prevalent across business sectors
The survey shows the risks of misreporting are compounded by an unethical business environment. While only 10 percent of Swiss respondents believe that bribery and corruption are widespread in their country, an alarming 57 percent for all respondents believe that bribery and corruption happens frequently in business in their countries. This number rises even further to
67 percent in rapid-growth markets. The proportion dropped however, to 26 percent (7 percent in Switzerland) who feel it is common to use bribery to win contracts in their own sector.

Michael Faske says: «Management needs to acknowledge that fraud, bribery and corruption could happen in their organization and profession. That is the only real effective way that its’ risks can be minimized. The survey reveals a worrying trend that many businesses are either ignoring or are blind to these risks. 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. 60 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 percent 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.

Michael Faske concludes: «The need to squeeze efficiencies out of compliance function is an inevitable consequence of today’s difficult economic environment. Many companies incorrectly assume that the mere existence of an anti-bribery program is sufficient to mitigate their risks. Compliance programs need to be highly focused and companies need to identify key risks, understand them and then act in a tailored and efficient approach, utilizing, for example, forensic data analytics. Whatever the sector, technology has a key role to play in helping highlight the business risks.»

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.

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