Belgium 12th global fraud survey

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Ernst & Young fraud survey: …

Ernst & Young fraud survey:
- Bribery and corruption is widespread
- Increased willingness to pay bribes or misstate financial statements

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  • 1. Growing Beyond: a place forintegrity12th Global Fraud Survey findings for BelgiumMay 2012
  • 2. Survey approach and participant profile ► Between November 2011 and February 2012, our researchers conducted a total of 1,758 interviews with employees in 43 countries covering North America, Latin America, Europe, Africa, Middle East, Far East and Oceania. ► A sample of the largest companies in each country by turnover was interviewed. Senior executives interviewed included CFOs, heads of internal audit, heads of legal and chief compliance officers. Details of the full survey are shown below. Role within organization % of respondents Global revenues % of respondents Finance 42 Above US$1b 32 Internal Audit and Risk 22 US$500m – US$1b 22 Legal 9 Less than US$500m 46 Compliance 3 Other executives 24 ► All interviews were conducted by telephone in the local language. ► 50 interviews were conducted in Belgium. ► Results are compared with findings for Western Europe, based on 602 interview across 12 countries - Austria, Belgium, France, Germany, Greece, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, and UK. ► Please note that, due to rounding, some figures may not sum to 100%. On some slides the “don‟t know” and "refused" percentages have been omitted to allow better comparison between the given responses. As a result, percentages may not total 100%.2 12th Global Fraud Survey
  • 3. Summary for Belgium ► Belgian businesses perceive incidence of bribery and corruption in their country as very low (10%), less than half that seen in Western Europe (22%) and significantly lower than the rest of world (39%). ► Surprisingly, however, justifying unethical behavior, such as „making cash payments‟ (34%) during an economic downturn, are at significantly higher levels than that of Western Europe and globally. ► Belgian businesses support a broad range of anti-bribery policy measures, albeit below regional and global levels. Notably, levels of available „training on anti-bribery/corruption policies‟ (38%) are far below Western Europe (56%) and globally (55%). ► Belgian companies place strong emphasis on external auditing (82%) to monitor compliance with anti-bribery laws, higher than Western Europe (73%) and the rest of the world (75%). ► Interestingly, „specialist monitoring software / IT systems‟ are also more widely employed than the global or regional norm. ► Belgian businesses are more inclined to adopt processes and systems to manage and monitor third party relationships than the rest of the world. ► In particular, over three-quarters (76%) use approved supplier databases, significantly outpacing all comparatives.3 12th Global Fraud Survey
  • 4. Summary for Belgium (cont’d) ► Similarly to both regional (61%) and global (63%) averages, respondents are likely (64%) to accept that market entry presents new risks. ► Nearly 40% of Belgian companies believe liability is shared with third parties, slightly higher than that of Western Europe (34%), but in line with the global average (39%). ► Less than a quarter (24%) support establishing whistleblowing compensation schemes, lower than the region (38%) as a whole, and markedly below the global comparative (52%). ► The overall perception of Belgian authorities‟ willingness to prosecute bribery and corruption cases (98%), and their perceived effectiveness at securing convictions (40%), is overwhelmingly positive. These are considerably higher than both regional and global norms. ► The majority of Belgian companies (62%) mimic the regional (61%) outlook, in their support for increased regulatory supervision, although this is slightly below the rest of the world viewpoint (69%).4 12th Global Fraud Survey
  • 5. Bribery and corruption is widespread % Applies to % Does not apply to % Applies to Western Europe Global Bribery/corrupt practices happen 82 10 22 39 widely in business in this country In our sector, it is common practice to use bribery to win 92 6 5 12 contracts Bribery/corrupt practices have increased because of the 76 12 16 24 economic downturn Q: For each of the following, can you tell me whether you think it applies, or does not apply, to your country/industry, or whether you don‟t know? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)5 12th Global Fraud Survey
  • 6. Increased willingness to pay bribes or misstate financial statements Western Europe Global Entertainment to win/retain 42 26 30 business Cash payments to win/retain 34 11 15 business Personal gifts to win/retain 12 12 16 business Misstating companys 10 5 5 financial performance None of these 34 59 53 Dont know/refused - 3 Shown: percent stating response Q: Which, if any, of the following do you feel can be justified if they help a business survive an economic downturn? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)6 12th Global Fraud Survey
  • 7. Failure to follow through on tone from the top % Applies to % Does not apply to % Applies to Western Europe Global We have an anti-bribery/anti-corruption policy and code of conduct 22 78 84 81 Senior management has strongly communicated its commitment to our anti- 28 72 84 84 bribery/anti-corruption policies The guidance on anti-bribery/anti- corruption is available in local languages 32 68 67 63 There are clear penalties for breaking our anti-bribery/anti-corruption policies 38 60 71 71 People have been penalized for breaching our anti-bribery/anti-corruption policies 44 54 40 45 There is training on our anti-bribery/anti- corruption policies 62 38 56 55 Q: For each of the following, please tell me whether it applies, or does not apply, to your organiztion, or whether you don‟t know? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)7 12th Global Fraud Survey
  • 8. Types of compliance monitoring processes in use Western Europe Global Regular audits by external 82 73 75 auditor Regular internal audits 78 84 86 Specialist monitoring 56 36 43 software/IT systems Whistleblowing hotlines 40 49 53 Regular reviews by external law firms or specialist 28 25 33 consultants Shown: percent applies to Q: Which of the following systems or processes does your organiztion have for monitoring compliance with anti-bribery and anti-corruption laws? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)8 12th Global Fraud Survey
  • 9. Inconsistent level of recognition of the risks of investing in new markets % Strongly disagree % Tend to disagree % Tend to agree % Strongly agree Belgium 4 16 32 32 Western Europe 9 12 33 28 Global 7 13 36 27 Q: To what extent do you agree or disagree with each of the following statement? Planned investment by my company in new markets will open us up to new risks Base: all respondents in Belgium (50), Western Europe (602), Global (1758)9 12th Global Fraud Survey
  • 10. Approaches adopted in managing third party relationships Western Europe Global Approved supplier database 76 52 59 Background checking system 60 51 56 Audit rights / regular audits of 56 46 45 the 3rd party Use external provider to run 48 28 34 checks Check on ownership of the 48 48 50 3rd party Use software/technology 40 27 30 based check of 3rd party Shown: percent applies to Q: Thinking about third parties that your organiztion uses, what systems or processes do you have in place to manage and monitor those relationships? Base: all who use a third party Belgium (25), Western Europe (422), Global (1268)10 12th Global Fraud Survey
  • 11. Frequency of conducting due diligence into fraud and corruption risks % Never % Not very frequently % Fairly frequently % Very frequently % Always Pre-acquisition Belgium 17 4 21 13 46 Belgium 09/10 Not surveyed Western Europe 17 13 16 9 44 Global 17 14 14 11 43 Post-acquisition Belgium 27 15 27 8 23 Belgium 09/10 Not surveyed Western Europe 24 14 18 13 31 Global 26 15 17 12 29 Q: How frequently has your company conducted due-diligence into fraud and/or corruption-related risks before acquiring a new business in the last two years? Base: acquirers in Belgium (24), Western Europe (327), Global (957) And how frequently has your company conducted fraud and/or corruption related post-acquisition due diligence in the last two years? Base: acquirers in Belgium (26), Western Europe (339), Global (1032)11 12th Global Fraud Survey
  • 12. Likelihood of management cutting corners % Strongly disagree % Tend to disagree % Tend to agree % Strongly agree Belgium 10 14 38 32 Western Europe 20 16 31 22 Global 23 19 29 17 Q: To what extent do you agree or disagree with each of the following statement? Company management is likely to cut corners to meet targets when economic times are tough Base: all respondents in Belgium (50), Western Europe (552), Global (1403)12 12th Global Fraud Survey
  • 13. Limited awareness of liability for third-party actions Western Europe Global The company and 3rd party have joint liability for the actions of the 38 34 39 3rd party The company is liable for the 6 21 16 action of its 3rd party agents The 3rd party only is liable for its 4 12 14 own action Not relevant/Dont know/ refused 52 33 32 Shown: percent applies to Q: Many companies make use of third-party agents as part of their normal commercial activities, particularly around sales and distribution. Which of the following is closest to your understanding of the liability companies have for the actions of 3rd party agents acting on their behalf Base: all respondents in Belgium (50), Western Europe (602), Global (1758)13 12th Global Fraud Survey
  • 14. Boards would benefit from deeper understanding % Strongly disagree % Tend to disagree % Neither / nor % Tend to agree % Strongly agree Belgium 17 17 10 38 17 Western Europe 20 30 11 20 18 Global 17 20 10 26 26 Q: To what extent to do you agree or disagree with each of the following statement? Our board needs a more detailed understanding of the business if it is to be an effective safeguard against fraud, bribery and corrupt practices Base: all C-suite Directors Belgium (29), Western Europe (262), Global (736)14 12th Global Fraud Survey
  • 15. Support for whistleblower bounty schemes Belgium Western Europe 2 12 18 6 24 26 18 22 20 Global 2 11 20 22 30 15 % Strongly support % Tend to support % Neither support nor oppose % Tend to oppose 20 30 % Strongly oppose % Dont know Q: To what extent would you support or oppose compensation schemes for whistleblowing being established in your country? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)15 12th Global Fraud Survey
  • 16. Perception of regulators and law enforcement authorities Belgium 40 58 2 Western Europe 29 56 10 6 Global 27 50 16 6 % They appear willing to prosecute cases of bribery/corruption & seem effective in securing convictions % They appear willing to prosecute cases of bribery/corruption but do not seem effective in securing convictions % They do not appear willing to prosecute cases of bribery/corruption % Dont know Q: Thinking about regulators and law enforcement authorities in your country, which of the following statements best describes their approach to cases of bribery/corruption? Base: all respondents in Belgium (50), Western Europe (602), Global (1758)16 12th Global Fraud Survey
  • 17. Support for more supervision by regulators Belgium 26 12 62 Western Europe 25 13 61 Global 19 10 69 % Disagree % Neither/ nor % Agree Q: To what extent to do you agree or disagree with each of the following statements? There should be more supervision by regulators and government in the future, to try to reduce the risk of fraud, bribery and corruption. Base: all respondents in Belgium (50), Western Europe (602), Global (1758)17 12th Global Fraud Survey
  • 18. Participants – region and country Number of interviews Australia 50 Japan 50 North America 100 Canada 50 USA 50 Central & Eastern Europe 405 Latin America 176 Baltic States† 50 Argentina 25 Czech Republic 50 Brazil 50 Western Europe 602 Hungary 50 Chile 25 Austria 51 Poland 55 Colombia 26 Belgium 50 Romania 50 Mexico 50 France 50 Russia 50 Germany 50 Turkey 50 Greece 50 Middle East*, India, & Africa 225 Ukraine 50 Italy 50 India 50 Netherlands 50 Kenya 25 Norway 50 Far East 150 Middle East* 50 Spain 50 China (inc. Hong Kong) 50 Namibia 25 Sweden 50 Indonesia 25 Nigeria 25 Switzerland 51 Malaysia 25 South Africa 50 UK 50 Singapore 25 Vietnam 25 † Latvia, Lithuania, Estonia Base: all respondents (1758) * UAE, Jordan18 12th Global Fraud Survey
  • 19. Number of Belgium interviews: role, sector, revenue Job function Sector Finance 30 Automotive 5 Internal Audit and Risk 9 Consumer products / retail / wholesale 11 Legal 4 Financial services 1 Compliance - Life sciences - Manufacturing / chemicals 11 Other executives 7 Oil, gas, and mining 2 Power and utilities 3 Revenue Professional firms and services 5 More than $1 billion 5 Real estate 4 $500 million to $1 billion 6 Technology, communications, and 3 Less than $500 million 51 entertainment Other transportation 4 Other sectors 1 Base: all respondents in Belgium (50)19 12th Global Fraud Survey
  • 20. Ernst & YoungAssurance | Tax | Transactions | Advisory Christophe Ballegeer PR & Communication ManagerAbout Ernst & Young christophe.ballegeer@be.ey.comErnst & Young is a global leader in assurance, tax, +32 (0)2 774 90 07transaction and advisory services. Worldwide, our 152,000people are united by our shared values and an unwaveringcommitment to quality. We make a difference by helping ourpeople, our clients and our wider communities achieve theirpotential.Ernst & Young refers to the global organization ofmember firms of Ernst & Young Global Limited, each ofwhich is a separate legal entity. Ernst & Young GlobalLimited, a UK company limited by guarantee, does notprovide services to clients. Ernst & Young and thestylized Ernst & Young symbol are registered withtrademark offices around the world.This document is proprietary to Ernst & Young and theinformation contained herein is confidential.For more information about our organization,please visit www.ey.com/be.Follow us: twitter.com/EY_Belgium© 2012 EYGM Limited.All Rights Reserved.This publication contains information in summary formand is therefore intended for general guidance only. It isnot intended to be a substitute for detailed research orthe exercise of professional judgment. Neither EYGMLimited nor any other member of the global Ernst &Young organization can accept any responsibility for lossoccasioned to any person acting or refraining from actionas a result of any material in this publication. On anyspecific matter, reference should be made to theappropriate advisor.