One out of five employees is aware of financial manipulation in their company abroad, according to a new survey by Ernst & Young, and 42 percent of board directors and senior managers are aware of irregular financial reporting in their company. Financial Malfeasance Widely Known at Companies describes how employees of Europe, Middle East, India and African firms are well aware of their company practices.
In addition, 57 percent said they believe bribery and corruption are
widespread in their country. The survey also found that 38 percent of
all respondents believe companies within their jurisdiction overstate
their financial performance.
While incentives for malfeasance may be understandable, given pressures to perform, the culture underlying the ability to report it constrains a company's ability to control it. This study showed that, while most respondents know their company has an
anti-bribery and anti-corruption policy, there is a gap between senior
management and employees when it comes to the relevance and
effectiveness of this policy. Sixty percent of directors and senior
managers believe that their company would support people who reported
cases of suspected fraud, bribery or corruption, whereas only 34 percent
of other employees agree.
David Stulb, global leader of Ernst & Young’s Fraud Investigation & Dispute Services practice,said, "Our experience also shows that leaders of organizations that
successfully manage the risk of fraud, bribery and corruption ask the
difficult questions and demand answers, particularly about the financial
reports they receive."
One wonders to what extent external management consultants are in a position to engage client executives to facilitate improved ethical culture and practices.