EY Global Fraud Survey 2016

Corporate India is on a weak wicket when it comes to fixing individual accountability in its fight against fraud, bribery and corruption. Higher degree of loyalty to company or colleagues is seen preventing whistle-blowing by individuals in India.

Around 80 per cent of India respondents in the EY Global Fraud Survey 2016 believe that prosecuting individuals would help deter future fraud, bribery and corruption by executives. 

Perhaps reflecting that India Inc’s battle against corruption is going to be a long-drawn one, almost one-third of (30 per cent) of India respondents are prepared to book revenues earlier than they should be recognised, the highest proportion globally (4 per cent), as against 9 per cent in emerging markets.

Around 28 per cent of respondents in India said that bribery is still being used to win business contracts, as against 11 per cent globally and 4 per cent in developed markets.
 

Part of a global survey that involved 2,825 individuals – including 50-odd India-based CFOs, legal heads and compliance heads - India ranks 17th in top 29 markets which considers bribery and corruption as an on-going challenge.

Around 58 per cent of India respondents said that they believe bribery and corruption was widespread in the country, as against 39 per cent globally.  

Almost a third of respondents in India (30 per cent) cited loyalty to their company or to colleagues (28 per cent) as a reason to not report any incidents of fraud, bribery or corruption. This is a stark contrast from the global average which ranks at 19 per cent of respondents citing loyalty to company and 18 per cent to colleagues.

Over two-third of India respondents (70 per cent) justified adopting unethical means to meet financial targets. These include adopting more flexible product returns policies, change assumptions determining valuations or reserves, extend monthly reporting period, backdate a contract or even book revenues earlier than they should be.

“India needs to fix individual accountability to make its fights against corruption and fraud more effective,” said Mukul Shrivastava, partner, fraud investigation & dispute services, EY India.

The survey noted that amidst changing regulatory regime, there has been a notable increase in enforcement activity by Indian authorities. The government and financial regulators are taking measures to combat black money through amendments in the Benami Transaction (Prohibition) Bill, and legislations focussing on corruption and whistle-blower protection, the survey added. 

“Although 76 per cent of companies have anti-bribery and anti-corruption policies in place, they must realize that “paper-based compliance” will not suffice,” the survey said. From an operational perspective, companies find it a challenge to define key performance indicators for their compliance functions and demonstrate the value they deliver to the business, the survey said.

Striking a warning note, the survey noted that many Indian companies are still not recognising cybercrime as a risk to their business.