Ethical Performance
inside intelligence for responsible business


EY finds worrying levels of fraud, bribery and corruption worldwide

August 2014

EY’s 13th Global Fraud Survey, Overcoming compliance fatigue: reinforcing the commitment to ethical growth, has found concerning levels of perceived fraud, bribery and corruption across the world.

The survey included in-depth interviews with more than 2,700 executives across 59 countries, including chief financial officers, chief compliance officers, general counsel and heads of internal audit. Nearly 40% of all respondents believe that bribery and corruption are widespread in their country.

With respondents portraying a business environment of pervasive corruption in many countries, it would appear that management and boards are struggling to respond to long-standing threats, let alone addressing emerging risks such as cybercrime.

David Stulb, Global Leader of EY’s Fraud Investigation & Dispute Services (FIDS) practice commented: “With high-profile cybercrime incidents making headlines on a regular basis, boards should expect management to have a robust incident response strategy in place. Pressure on companies for timely disclosure of breaches is rising in many jurisdictions as well, so these issues require attention from the legal and compliance functions. The US Securities and Exchange Commission is increasingly focused on cyber risks as they relate to the integrity of financial statements too, so audit committee members have to be alert to today’s cyber threat environment.”

Worryingly, given their role in setting an ethical tone from the top, a significant minority (11%) of CEOs considered misstating financial performance to be justifiable in order to help a business survive an economic downturn, compared with 6% of all respondents.

Stulb continued: “Given the risk of management overriding financial controls, the implications for boards from these findings about C-suite integrity are serious. Enhancing board connectivity with business and finance leaders in the company – but below the C-suite – would be useful to confirm that the board is getting the full and accurate picture. With regulators committing additional resources to prosecuting financial statement fraud, and cooperating frequently with prosecutors from other jurisdictions, the stakes have never been higher.”

The survey also found that compliance fatigue within businesses appears to have set in at a time when they can least afford it. In a regulatory environment in which international cooperation is becoming more frequent, respondents described a largely static compliance environment.

“CEOs can do more to lead from the front on these matters, and boards and other stakeholders should intensify their efforts to challenge management to reinforce their commitment to ethical growth,” added Stulb. 

Global | Corruption

3BL Media News
Sign up for Free e-news
Report Alerts
Job Vacancies
Events Updates
Best Practice Newsletter