ACL Blog – Management and Board Members are Untrustworthy

 2009-12-01

Management and Board Members are Untrustworthy

By David Chiang, CA, CIA, CMC, ACDA

“There is a disappointing tolerance for unethical behavior. And, a great deal of mistrust of management with many believing that senior management and board members are untrustworthy.”

These are the startling findings of a recently published Ernst & Young 2009 European Fraud Survey based on the views of over 2200 respondents. This less than stellar endorsement of management and board governance is startling indeed. Not only is there a high level of mistrust of management but it would seem that the ethical bar has been substantially lowered that many are willing to condone “making cash payments to win business or misstating financial performance to mask disappointing results” says David Stulb, Global and EMEA leader for E&Ys Fraud Investigation Services.

According to this survey, Internal Audit is seen as the primary Anti-Fraud measure by 68% of the respondents and External Audit by 54%. These findings suggests an emerging expectations gap between what auditors actually do in terms of fraud detection and prevention and what respondents believe to be their perceived role.

This added pressure on Internal Audit, to be the guardians of corporate trust, reflects on the reputation for integrity and correctness of the profession. But for this trust to be well placed requires Internal Auditors to be prepared for the challenge.

One critical area as identified in the survey is the “need to be able to gather, analyze, and report on data flowing from multiple, incompatible, disparate and complex systems.” At ACL, we have heard of this challenge before. It’s a timeliness challenge that can be effectively handled with the use of data analysis technology.

By using ACL software and services, Internal Auditors are better able to access and analyze data across multiple divisions or entities. By using a common analysis tools like ACL’s AuditExchange2 platform, auditors from merged organizations can collaborate more effectively to combat fraud and other abuses. All of these actions can reduce the risk of fraud and the negative impact that fraud can have on the bottom line and corporate reputation.

The E&Y survey challenges us to “act urgently.” Said Stulb, “Anti –fraud is key to good corporate social responsibility.” And, it’s also good for business.

Click here to view the survey

Find out more: ACL Blog

Tuesday, December 1, 2009 In: Hot Topics Comments (None)

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