Complex business practices open the door to fraud
Contradictions in managing financial data is opening the door to corporate fraud in the UK, says new survey.
LONDON – A new survey of more than 60 audit and financial executives in the UK and Germany has found that the complexity of today's business operations is opening the door to corporate fraud in the UK. It also highlights the fact that inherent contradictions in managing financial data create a confused environment where non-compliance and fraudulent activity can go unchecked and unnoticed.
Although more than 77% of respondents to the survey, conducted by ACL Service,s agreed a single view of all relevant financial data was vital to effectively meeting today's corporate governance requirements, less than a quarter of organisations have this complete picture – leaving many of the companies surveyed vulnerable to inefficiencies and fraud.
Despite this, however, 81% still felt confident about being able to meet financial compliance and governance obligations.
Further contradictions and challenges were highlighted in the survey. Some 84% of respondents agreed that continuously monitoring the internal controls of key business processes would ensure operational and financial integrity, but only 43% were planning to do so, or had deployed these techniques.
Some 57% currently perform financial audits either quarterly or annually, and only 27% say they would like to carry out audits more frequently (such as daily or weekly). This is despite an awareness of the benefits of reacting promptly when internal controls are not working as intended.
And of the companies surveyed, 42% do not know how long a suspect transaction outside internal control parameters could go unnoticed, and nearly one third believe an anomaly could go unnoticed for more than six months.
“These results illustrate the true complexity of managing financial data across organisations. While many financial professionals acknowledge the challenges, many appear unable to implement the organisational changes necessary - despite the clear business benefit,” says Liz Maloney, regional director of EMEA for ACL.
“The majority of executives surveyed believe they have effective processes in place, but by not continually monitoring their financial transactions, UK organisations are leaving themselves open to fraudulent activities and organisational inefficiencies that can severely affect the bottom line,” she adds.
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