Corporate Governance
Corruption and compliance risk
Seeking to overcome economic doldrums, many companies in developed markets are expanding into high-growth markets. Yet this growth strategy brings with it a likely increase in fraud and corruption risk at a time when regulators around the globe are passing new laws and ramping up their efforts to crack down on corporate wrongdoing.
The new UK Bribery Act and China’s new anti-bribery law are two examples of new legislation that will impact companies globally. In the United States, the Department of Justice and the SEC continue to levy record-setting fines for violations of the Foreign Corrupt Practices Act (FCPA).
In this environment, audit chairs and corporate compliance officers are asking, “How much compliance is enough?” The Serious Fraud Office charged with enforcing the new UK Bribery Act says companies should ensure their compliance programs are continually improved and track updated regulatory guidance – such as the Organization for Economic Co-operation and Development’s best practices on internal controls, ethics, and compliance.
Audit committee chairs say they are encouraging their companies to adopt a risk-based approach to compliance, investing more efforts to fight corruption in areas where risks are greatest – and ensuring that senior management sets an ethical tone at the top. A culture of zero tolerance is the ultimate goal.
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