More than half of all financial institutions in Europe, the Middle East, India and Africa (EMEIA) are experiencing widespread corruption or bribery in their business, according a recent fraud survey published by Ernst & Young.
According to the report, one in five employees are aware of financial manipulation in their own company in the last 12 months.
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At board and senior manager level the proportion is higher still; more than 40% of those asked said that sales or costs had been manipulated at their company, the report revealed.
The survey also found that 38% of all respondents believe companies within their jurisdiction overstate their financial performance. Almost half the respondents in rapid-growth markets agree that companies in their countries often misrepresent financial performance, compared with 29% of those with headquarters in Western Europe.
The most common frauds were sales recorded before they should be to meet financial targets, under-reporting of costs, and customers required to buy unnecessary stock to meet short term sales targets.
The survey shows the risks of misreporting are compounded by an unethical business environment. Fifty-seven percent of all respondents believe bribery and corruption are widespread in their country, which rises to 67% in rapid-growth markets. The proportion dropped however, to 26% who feel it is common to use bribery to win contracts in their own sector.
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By GlobalDataThe report added that while the majority of respondents are aware that their company has an anti-bribery/anti-corruption (ABAC) policy, many organizations have a significant perception gap between senior management and employees when it comes to the relevance and effectiveness of this policy. 60% of directors and senior managers believe that their company would support people who reported cases of suspected fraud, bribery or corruption, whereas only 34% of other employees agree.
The survey was conducted late last year by Ipsos, a market research firm, on behalf of Ernst & Young. More than 3,000 board members, executives and managers from 36 countries participated in the annual survey.
