APART from revenue streams and operations, corporate integrity was found to be challenged amid the pandemic as well, a survey by a professional services firm showed, prompting the call for better compliance monitoring on the part of businesses.
According to the 2022 Ernst & Young (EY) Global Integrity Report, more than half of the employees and officials across the world said that standards of corporate integrity have either remained status quo or worsened in the last 18 months.
Nearly all of the respondents agreed that integrity is crucial but some 41 percent noted that the pandemic has made it “more difficult to act with integrity in business dealings.”
Almost half of 10 board member respondents said that senior managers and high performers’ unethical behavior are still being tolerated.
Some 34 percent also said that it was easier to bypass business rules in their respective companies.
“The Covid-19 pandemic has had a serious impact on integrity standards for companies around the world. The change to ways of working throughout the Covid-19 pandemic has created a heightened risk of fraud and unethical behavior,” said Andrew Gordon, EY Global Forensic and Integrity Services Leader.
He explained that “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.”
The EY study, on a positive note, observed that more investments in integrity and compliance initiatives were pursued in the past year.
About 53 percent of the respondents have a code of conduct, which is higher than 47 percent 18 months ago. More training programs were also launched, providing workshops on relevant regulatory or professional requirements.
“Although organizations are investing more in communication and training programs, this is not enough. There is a worrying divide between investment in action and genuine change,” Gordon said.
The survey showed that the investments for integrity and compliance initiatives are not being communicated effectively.
For example, the majority or 60 percent of board member respondents said they have informed the organization about the importance of behaving with integrity but only 30 percent of the employee respondents backed this claim.
The study also showed that board members have a markedly higher awareness level regarding policies on working from home and training on data privacy regulations, revealing a gap between the views of the sets of subjects.
“A strong culture of integrity is vital, and businesses must review what is working and where there are issues to address,” Gordon added.
Meanwhile, 61 percent of the respondents agreed that regulation in data protection and privacy will bode well for the businesses.
“The business landscape has evolved beyond recognition in the last two years and there are many new challenges that leaders must address. Managing data integrity in a hybrid world creates new risks; and businesses must adapt their processes in line with these risks,” Gordon explained.
“Providing training programs that are effective and memorable is one key element of changing future conduct and behaviors to establish a culture of integrity. It’s people, not systems, that are ultimately responsible for fraud,” he added.
The study surveyed over 4,700 employees, managers and board directors across 54 countries and territories.