2013 EMEIA Fraud Survey
Compliance programs: always more
It is essential that compliance programs are continuously strengthened and improved to reduce the risk of, and increase the detection of, fraud and corruption. This is challenging in an environment of significant cost-cutting, where compliance departments are under pressure to deliver more effective programs.
Our survey raises five issues that those responsible for compliance programs need to address:
- Senior management unaware of the issues
Our results suggest a significant perception gap between senior management and employees when it comes to the effectiveness of compliance programs. Sixty-seven percent of directors and senior managers believe that their commitment to anti-bribery and anti-corruption policies has been communicated strongly, compared with 44% of other employees.
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.
- Focus is too narrow
The results also raise questions over the breadth of the compliance programs in place. Fewer than half of the respondents knew that their company’s policy contains guidance on gifts or hospitality. Less than a quarter knew of policies on political contributions.
More than half of respondents don’t know whether their company has specific procedures to guide dealings with government officials. It appears that even where compliance programs are in place, there are still fundamental gaps in the areas covered by these policies.
- Compliance? Not my responsibility
We have seen a widespread reduction in the percentage of respondents who consider their company’s anti-bribery and anti-corruption program to be relevant to their work. Fewer than half of respondents think their colleagues would say it was relevant.
- Compliant business equals less competitive business?
Probably of most concern to compliance executives is the view that following their compliance policy very closely harms their competitiveness in the market. Over one in six respondents believe this.
Hence employees falsely perceive there to be a choice: implement compliance policies to the letter and risk losing opportunities; or take the risk of non-compliance and keep a competitive edge.
Typical remuneration mechanisms are likely to encourage the unethical choice. In the context of widespread pay cuts, the temptation to achieve results through bribery and corruption is even greater.
- Increased effort not keeping pace with the challenge
Given the enforcement environment, a third of respondents feel their company’s efforts to combat fraud, bribery and corruption have increased over the last few years.
However, our survey also finds that some key control areas are not getting the focus that they should. This includes checks on third parties and questions relating to the reliability of revenue recording.
For example, only 12% of respondents indicate that they had been asked for information on the identity of third parties, customers or suppliers.
There is clearly a risk that the pressure to deliver results, coupled with the perceived irrelevance and performance-hindering nature of compliance programs, could lead to a tacit acceptance of unethical behavior. Programs may be ignored or circumvented because they make it more difficult to achieve financial targets.
Base: All respondents (3,459); Board director/senior management (246); Other management (769); Other non-management employees (2,444)
The "Don't know" percentages have been omitted to allow better comparison between the responses given.