Widespread use of digital technology comes with a new exposure to fraud and corruption, according to an EY survey of 2,550 business leaders.
“In the era of digital transformation, products and the business processes that bring them to market are changing rapidly, creating significant challenges for the compliance function to keep pace,” the report warned.
Ninety-one per cent of companies expected that they would be using digital payments, the internet of things, robotics, or artificial intelligence within two years. That change has come with huge new volumes of customer and employee data, which could be used in acts of fraud and data theft.
EY offered strategies for compliance in the digital age, noting that “intensively” using data analytics can make programmes more effective.
In a separate report, EY suggested that forensic analytics are in a time of rapid advancement that will require companies to hire for specialised skillsets and pull together data from disparate sources. In that survey, respondents agreed most strongly that forensic analytics were effective in fighting financial statement fraud and money laundering, among other activities.
Of course, some of the risks remain human. Twelve per cent of respondents said they would extend the monthly reporting period to hit a financial target, while 7% would backdate a contract or book revenues early. Younger people — under 35 years of age — were more likely to do so.
The researchers suggest that companies should take different approaches to different types of employees as they try to discourage corruption, rather than a one-size-fits-all programme.
But the new research leaves one big question outstanding: Will a slate of new national laws on corruption have a positive effect?
In fact, surveys over the years have found that respondents in some reform-minded countries, such as the UK and Brazil, now are more likely to believe that corrupt practices are common. That could be linked to initial publicity about enforcement actions, EY suggests.
Overall, 38% of executives worldwide believe that corruption is widespread — the same portion as in 2012.
— Andrew Kenney is an FM magazine contributing editor based in the US. To comment on this article or to suggest an idea for another article, contact Jack Hagel, an FM editorial director, at Jack.Hagel@aicpa-cima.com.