The biggest challenge that companies face at present is the fraud risk management in an environment of growing instances of corporate fraud.
According to Ernst and Young's Fraud mitigation survey 2008, 'Tone at the top' is one of the key elements to combat fraud risk. It refers to an ethical atmosphere created in the workplace by the organisation's leadership team, by prioritising corporate values above other factors.
The fraud mitigation survey includes views of 124 management personnel across industries, providing insight into the management's perception of ethical issues in today's corporate world.
Among the key areas of function, purchase was found to be the most vulnerable to fraud risk in an organisation, followed by sales, accounting and warehouse/inventory. As much as 40% of the respondents revealed that there had been a suspected incident of fraud, misconduct, bribery or corruption in their companies.
In order to reduce fraud vulnerability, the survey states that there should be proper code of conduct in every company. Not only a code of conduct, but there should be awareness regarding the code of conduct, its relevance to business needs and also a need for consistent compliance.
Around 96% of the respondents agreed with the view that companies should have a code of conduct, 86% confirmed having it in their companies. However, responses were low when it came to believing that a code of conduct is useful in preventing and detecting fraud or corruption. Only 59% felt a code id was useful.
According to EandY's survey, such a low response could be due to the lack of awareness of the requirements and benefits of a code of conduct among other things.
Though 76% respondents were confident that employees in their respective companies complied with the code of conduct, only 35% respondents had signed the code of conduct once while 27% had either never signed a code of conduct or were not aware of such a requirement in their companies.
"It is important for companies to take proactive efforts to reduce their vulnerability to fraud and make its employees aware of such initiatives. The success of implementing a policy lies in the importance assigned to it by the senior management," commented Navita Srikant, partner and national leader, Fraud Investigation and Dispute Services, Ernst and Young.
The survey analysis also highlighted the significance of a speak-up culture, which encourages employees and external stakeholders to work with the company to mitigate fraud.
Source : www.in.news.yahoo.com
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