Global Fraud Survey 2016
Global commitments to combating corruption and enhanced cooperation by international law enforcement agencies have increased the pressure on companies to mitigate fraud, bribery and corruption risks. There is also a growing consensus that prosecuting individual executives, and increasing government efforts to apply international standards on the transparency of company ownership will help tackle these issues.
In this context, our 14th Global Fraud Survey provides powerful insights from over 2,800 senior executives in 62 countries and territories across the world. It shows that while many businesses have made significant progress in tackling fraud and corruption, there remains a persistent level of unethical conduct - 39% of respondents consider bribery and corruption to happen widely in their country, with almost half able to justify unethical behaviour to meet financial targets.
The report explores these issues in detail and provides insight as to how businesses can take steps to minimize the risk of corruption in their operations. It also provides specific regional insights in Africa, Brazil, China, Eastern Europe and India following interviews conducted by EY Partners with executives from leading companies about the survey’s findings.
Combatting corruption as a global priority
- 91% of respondents believe it is important to know the ultimate beneficial ownership of the entities with which they do business
- 83% of respondents view enforcement against management as an effective deterrent against fraud, bribery and corruption
Justifying unethical behaviour and misconduct
- 51% of respondents in emerging markets consider bribery and corruption to happen widely in their country
- 1 in 10 of respondents would make a cash payment to win or retain business in an economic downturn rising to 1 in 4 in the Far East
- 42% of respondents could justify unethical behaviour to ensure they met financial targets
- Almost half of all finance team members interviewed stated that they would be prepared to engage in at least one form of unethical behaviour to meet financial targets or safeguard a company’s economic survival.
- While 55% of companies have a whistle blower hotline in place – 19% of respondents cited loyalty to their company and 18% cited loyalty to their colleagues as deterrents to reporting incidents of fraud, bribery and corruption
- Only 50% of respondents globally are using specialist monitoring software to identify fraud risks
- 1 in 5 respondents are not identifying third parties as part of their anti-corruption due diligence
What steps should businesses take to minimize risk?
- Adequately resource compliance and investigations functions, so that they can proactively engage before regulatory action is taken
- Establish clear whistleblowing channels and policies that not only raise awareness of reporting mechanisms, but encourage employees to report misconduct
- Undertake regular fraud risk assessments, including an assessment of potential data-driven indicators