Standards of corporate integrity have stayed the same or worsened over the last 18 months, said EY recently.
According to the 2022 EY Global Integrity Report, more than half (55%) of employees and leaders from companies around the world believe that standards of corporate integrity have stayed the same or worsened over the last 18 months.
The survey, which canvassed the views of more than 4,700 employees, managers and board directors from 54 countries and territories, found that leaders are struggling to create and communicate a strong and effective culture of integrity within their business, EY said.
The COVID-19 pandemic has had a serious impact on integrity standards for companies around the world, said Andrew Gordon, EY Global Forensic & Integrity Services Leader.
“The change to ways of working throughout the COVID-19 pandemic has created a heightened risk of fraud and unethical behaviour,” he noted. “Hybrid working makes it difficult to undertake effective compliance monitoring, and fraud risk factors typically increase at a time of crisis because companies and individuals face more financial pressures.”
- While a record (97%) respondents to the survey agree that integrity is important within their organisations, 41% say that the COVID-19 pandemic is making it more difficult to act with integrity in business dealings.
- In the last 12 months, there has been greater investment in integrity and compliance initiatives: 53% of responding organisations have a code of conduct in place, compared with 47% 18 months ago.
- There is also an uptick in training programs, with 46% of businesses providing regular training on relevant legal regulatory or professional requirements, compared with 38% in 2020.
- However, the survey highlights that this increased investment is not being communicated effectively and senior management is often over-confident in the effectiveness of its corporate integrity programs.
- For example, while 60% of board member respondents say that their organisation has communicated the importance of behaving with integrity frequently in the last 18 months, less than a third (30%) of employee respondents remember seeing any communications on the topic.
- There is also a gap between the views of board members and employees in relation to awareness of policies on working from home (80% vs. 51%) and awareness of training on data privacy regulations (52% vs. 35%).
- Along with a lack of awareness, there appears to be limited understanding of the critical importance of integrity, beyond compliance with rules and regulations.
- Only a third (33%) of respondents say that an important characteristic of integrity is behaving with ethical standards.
Ethical behaviour: an internal disconnect
The survey also highlights a further disconnect when it comes to behaviour, EY pointed out.
There appears to be a willingness among the most senior executives to act outside the compliance rules, the firm said.
Board members who were questioned as part of the research were five times as likely as employees to falsify financial records (15% vs. 3%) and six times as likely to say they would be willing to mislead external third parties such as auditors (18% vs. 3%), survey results indicate.
Building compliance programs that are fit for purpose
In addition, the survey also looks at respondents’ views around data protection and privacy.
Regulation in these areas has been the focus of new legislation over recent years and 61% of respondents agree that this is beneficial for business, EY said.
The bottom line is that even the best compliance frameworks can be breached if there isn’t a culture of doing the right thing, Gordon said.
“Providing training programs that are effective and memorable is one key element of changing future conduct and behaviours to establish a culture of integrity,” he advised. “It’s people, not systems, that are ultimately responsible for fraud. That’s why building a strong culture of integrity is just as important as putting policies in place.”