Driving ethical growth – new markets, new challenges, the title of Ernst & Young’s 11th Global Fraud Survey, shows fraud is up; audit and legal are stretched to deal with these challenges; compliance is patchy; and Boards need more and better information to manage the risks.
They interviewed more than 1,400 chief financial officers, and heads of legal, compliance and internal audit in 36 countries to get their views on how companies are managing the risks associated with fraud, bribery and corruption.
The survey was conducted in 2009 and 2010 on behalf of Ernst & Young’s Fraud Investigation & Dispute Services practice.
Consistent with the experience of past recessions, companies have been struggling with an upsurge in fraud and corruption. Almost one in six of our respondents have experienced a significant fraud in the past two years.
Compliance is New
Compliance is still a developing area outside of the highly regulated industries, such as life sciences and financial services.
About half of the compliance professionals surveyed have been in a compliance role for less than five years.
As a relative newcomer, the compliance function faces the extra hurdle of demonstrating its value. Of course, you need to demonstrate value if you want to get more resources. This was the greatest challenge identified by compliance professionals in their survey.
The competition for resources also reduces compliance’s ability to gather the current management information required to do its job, making it harder still to demonstrate value to the rest of the business.
Board Concerns
Seventy-six percent of respondents feel their boards are increasingly concerned about their personal liability from fraud, bribery and corruption. The survey indicates that the Board’s level of concern with fraud has risen with the overall rise in fraud and corruption risks in the current economic climate. All the survey participants think that board members are taking their own personal exposure seriously.