Asia-Pacific Companies at Greater Risk of Fraud
Ernst & Young, a Big Four accounting firm, conducted a fraud survey across the Asia-Pacific region, finding that there is a large disconnect between company policies, enforcement, and execution that is obstructing efforts to diminish fraud. The survey consisted of 600 senior level executives from companies in countries including, Australia, China, Indonesia, Malaysia, New Zealand, Singapore, South Korea and Vietnam.
In the survey nearly half of the executives stated that their practices to reduce fraud are good in theory but do not work well in reality. This is giving Asia-Pacific companies false hope that the company is protected from bribery, fraud, and corruption when in reality, companies are still at considerable risk. Measures to detect fraud are increasingly important in areas with an unstable financial market, such as the Asia-Pacific region. Companies in these markets are under great burdens to show company growth regardless of market conditions. According to the survey 27 percent of respondents said they feel management is likely to take cut corners in order to reach higher targets.
For foreign countries that have operations in this region, such threats have a potential to expose them to noteworthy regulatory risks. It is extremely important to assess the risks of the Asia-Pacific market in order to understand how business is conducted across the region. Recent developments in the market may be at fault for the deflation of corporate compliance programs, exposing companies to potential risks.
Country cultures and governmental systems play a big role in why many companies have not yet implemented techniques proven to decrease workplace fraud. A popular way companies around the world deal with fraud, bribery, and corruption is to implement a whistleblowing scheme. In countries such as New Zealand, 100 percent of respondents to the survey said they are willing to use a whistleblowing hotline, compared to South Korea, where this number was only 18 percent. Cultures and governmental structure have a heavy impact on whether people feel comfortable with this technique or not. There are also many other technologies available to companies such as transaction monitoring or forensic data analytics that assist in the detection of fraud, but they are not being used by enough companies to be beneficial to the entire region.
Many countries could mitigate these risks with strong internal audit teams within companies, as well as stronger regulations from the government. There are many options out there for companies in the Asia-Pacific region to decrease their risk of fraud, but without the implementation of these options, it is going to be a long road for companies to mitigate the threats they are now facing. What do you think companies in volatile markets should do to deal with the issues of fraud, corruption, and bribery?