Biz face higher probability of fraud: Report

Mumbai: Organisations’ exposure to fraud and corruption risks has risen tremendously in a tech-dominated world, said EY’s Global Fraud Survey 2018 report.

According to it, 40 per cent of respondents from India indicated widespread bribery and corruption in business. There is increasing justification of unethical behaviour at the workplace as well as gaps in integrity as 1 in 5 respondents in India said that offering cash payments can be justified, and 1 in 6 said bribery is commonly used to win deals.

However, around 80 per cent of those surveyed believe that the key advantages of demonstrating integrity are successful business performance and positive customer perception.

This according to E&Y shows inconsistency between organisational intent and actual performance of employees.

“Macroeconomic developments, market pressures, new regulations, enforcement and digital disruption have led to a shift in India’s risk landscape. Fraud, bribery and corruption continue to escalate, turning exceedingly complex and ingrained within businesses.

In such trying times, management needs to boost the integrity agenda, redefine compliance programs and adopt a tech-centric approach driven by data analytics to minimise ethical lapses, business losses and reputational damage,” said Arpinder Singh, partner & head, India and EMs, fraud investigation & dispute services, E&Y.  

What is more worrying is the fact that about 44 per cent of Indian respondents said that atleast one of the practices such as offering cash, entertainment, personal gifts and misstating financial performance is acceptable for business survival. The survey added that global enforcement agencies and regulators have levied more than $11 billion of financial penalties since 2012.

The report however highlighted that most firms are beefing up their anti-fraud and anti-corruption efforts through customised compliance and risk mitigation programs, whistle blowing mechanisms and web based training.

About 34 per cent of those surveyed feels it’s the responsibility of HR department while 26 per cent said its management’s responsibility to ensure that employees behave with integrity.

“This shows a contradiction with respect to employee behaviour as individual misconduct still prevails,” it said.