TORONTO, June 14, 2012 /CNW/ - While 82% of Canadian executives feel
investments into new global markets pose risks for their companies,
only 52% say their company always conducts due diligence into
fraud-related risks before acquiring a new business, Ernst & Young finds in a new survey. What's
more, the 12th Global Fraud Survey - Growing Beyond: a place for integrity shows a mere 29% of Canadian respondents say their organizations
perform post-acquisition due diligence into corruption-related risks.
"Canadian companies seem to be very aware of the risks posed by fraud,
bribery and corruption — but they expose themselves by not taking some
critical steps," says Mike Savage, Partner in Ernst & Young's Fraud
Investigation & Dispute Services practice. "Moving into new markets can
reap significant rewards, but only if done right. That means
understanding the local commercial practices and those of the target
before you move ahead."
Savage says while the results aren't necessarily surprising, they are
troubling. "Some 42% of Canadian respondents say company management
might be likely to cut corners to meet targets when economic times are
tough. That's lower than the global response, but still worrisome."
Interestingly, while 95% of Canadian respondents state that their
company has anti-bribery/anti-corruption policies, only 43% of
respondents note that people have been penalized for breaching these
policies. Without consistently applied internal discipline, employees
may believe breaches of those policies are tolerated.
"In volatile economic environments, growth and responsible business
conduct can sometimes appear to be competing priorities," states
Savage. "But generally the opportunities can be pursued by using
internal controls to mitigate the risks. Organizations have been more
successful in growing internationally where they make concerted,
risk-focused efforts that target areas of potential exposure, and
management leads by example. Successful companies are those able to
balance the priorities of growth and ethical business conduct."
He further notes that getting things right is not just about the
documented details — it's also important to understand the broader
operating environment a business will be working in. For example, only
28% of Canadian respondents believe they have joint liability for the
actions of the third party, compared to 39% of global respondents.
International regulatory settlements show that third-party due
diligence and monitoring are important compliance requirements.
Examples of third parties include distributors, agents and business
For effective fraud prevention, Canadian respondents put the most
confidence in regular internal audits (90%) followed by audits by an
external auditor (82%) and whistle blowing hotlines (81% compared to
About the Global Fraud Survey
The 12th Global Fraud Survey was conducted between November 2011 and February 2012. Researchers
conducted a total of 1,758 phone interviews with employees in 43
countries covering North America, Latin America, Europe, Africa, Middle
East, Far East and Oceania.
Principle respondents were CFOs, heads of internal audit, heads of legal
and chief compliance officers. Fifty interviews were conducted in
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and
advisory services. Worldwide, our 152,000 people are united by our
shared values and an unwavering commitment to quality. We make a
difference by helping our people, our clients and our wider communities
achieve their potential.
For more information, please visit ey.com/ca.
Ernst & Young refers to the global organization of member firms of Ernst
& Young Global Limited, each of which is a separate legal entity. Ernst
& Young Global Limited, a UK company limited by guarantee, does not
provide services to clients.
For further information:
416 943 2487
514 874 4308
604 648 3607