New Study Finds Poor Corporate Culture Leads to High Rates of Fraud
Many Organizations Lack Fraud Awareness
Written By Kelsey Carlo '18, PR Intern
New study raises concerns regarding corporate culture, fraud awareness
Utica, NY (07/03/2018)- According to a new joint study issued by global consulting firm Protiviti and Utica College, the results of the latest White-Collar Crime and Fraud Risk Survey reveal some troubling trends that should raise concerns for boards of directors and executive leadership.
The global survey conducted online consisted of questions on areas such as fraud risk assessments, fraud detection/prevention techniques and corruption. Globally, 748 executives and professionals – including board members, C–suite executives, general councils and chief audit executives (CAEs) completed the questionnaire.
Given the inverse relationship between culture and fraud, where a poor culture leads to high rates of fraud, companies are striving to introduce a measure of introspection to better understand the correlation between culture and ethical failures involving fraud, corruption and misconduct.
“One notable takeaway from the survey is that organizations continue to lag in employing leading practices to build a strong culture,” said Donald Rebovich, coordinator of Utica College’s Fraud and Financial Crime Investigation (FFCI) programs and executive director of UC’s Center for Identity Management and Information Protection (CIMIP). As much as 43 percent of organizations do not conduct ethics and fraud risk awareness training and 16 percent have no senior management professionals designated with ownership and responsibility for fraud risk management. The study also found that only 76 percent of large companies, 63 percent of midsize companies and 56 percent of small companies have a fraud risk management (mitigation) program, Rebovich said.
Resources also represent a significant challenge in building a strong corporate culture with clear fraud risk strategy; 36 percent of all organizations cite the limited availability of internal resources as a challenge in addressing fraud risk proactively.
Third parties have shown to represent a significant gap in fraud risk management; 32 percent of large companies, 49 percent of midsize companies and 45 percent of small companies are lacking high confidence that they have effective oversight of third parties.
Additional findings from the survey:
• North American organizations look relatively less concerned about well-defined risk strategies than do companies in other parts of the world.
• A significant percentage of large companies and North American-based organizations report not knowing how often the fraud risk assessment is conducted.
• Organizations in Latin America/South America and Europe are far more likely to include members from different departments on the fraud assessment team than are companies in other regions, particularly North America.
• The use of telephonic hotlines for employees to communicate concerns about accounting or auditing issues is far more prevalent in North America than in other regions.
• Less than half of organizations conduct surprise audits at least annually.
For more information, visit https://www.protiviti.com/US-en/insights/protiviti-fraud-risk-survey.
About Protiviti – Protiviti is a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit and has served more than 60 percent of Fortune 1000® and 35 percent of Fortune Global 500® companies. Protiviti and its independently owned Member Firms serve clients through a network of more than 70 locations in over 20 countries. The firm also works with smaller, growing companies, including those looking to go public, as well as with government agencies.
About Utica College – Utica College, founded in 1946, is a comprehensive private institution offering bachelors, masters and doctoral degrees. The College, located in upstate central New York, approximately 90 miles west of Albany and 50 miles east of Syracuse, currently enrolls more than 5,000 students in 42 undergraduate majors, 36 minors, 20 graduate programs and a number of pre-professional and special programs. For more information, visit www.utica.edu.