Survey shows that turnover and strategic change give fraudsters opportunities – just when the regulatory scrutiny of compliance is rising.
The ongoing global economic turmoil has given common criminals plenty of opportunities to commit fraud. It seems corporate criminals are doing the same. In the last two years, twice the number of corporate CFOs and heads of legal, internal audit and compliance polled for Ernst & Young’s 11th Global Fraud Survey reported suffering a serious fraud.
Worryingly, the quality of fraud-response policies around the world vary widely, with some companies applying best practices and others not thinking about the issue at all. For example, 14 percent of those polled in Central and Eastern Europe were not familiar with any fraud response plan at their companies.
One in seven of the executives that E&Y polled said they have never conducted a formal fraud risk assessment, and over a quarter of respondents admitted that they have not reviewed their policies in the past year, despite huge turnover at many companies. During transitions such as these, fraudulent activities can go undiscovered.
Also, two in five respondents said they rarely do fraud assessments for fear of bringing on regulatory enforcement actions. Those compliance groups that undertake these assessments may fail to unearth relevant information due to their lack of experience – after all, compliance offices at most companies are, at the most, five years old.