E&Y Warning on Corruption Checks
Ernst & Young is warning that businesses need to do more to ensure they have adequate procedures to prevent corruption among external business partners or risk falling foul of the requirements of the UK Bribery act.
Under the terms of the new legislation, companies must demonstrate they have ‘adequate procedures’ in place to address third party risks – including outsourced business—or risk a fine or jail sentence.
E&Y estimates that global companies with hundreds of third party partners now conduct around 10,000 and 20,000 background checks every year, but says its analysis suggests a lack of effective checking, often compounded by language and cultural barriers in new markets, can mean that risks are not spotted until they have caused serious damage.
Paul Walker, EMEIA head of forensic technology & ediscovery services at E&Y said: ‘Public commitments by enforcers against bribery and corruption mean it is now crucial for companies to adopt the same risk procedures for third parties that they would routinely enforce in other parts of their business.’
Analysis of 225 background checks carried out by E&Y on behalf of companies seeking to vet business partners, revealed the top corruption risks as potentially corrupt government links (50% of red flags), signs of litigation (11%), political connections (7%) and reports of illegal activities (4%). In areas such as medical research, government links accounted for 86% of red flags.
- FRC to Open Investigation against Deloitte over SIG Audit
- SIG Decides to Drop Deloitte as Group Auditor
- PwC Replaced as Auditors by the KPMG of a 109-year Old Client
- Big Four firms Face Potential £10m Fines for Shoddy Audit Work
- ACCA Releases New Report Analysing the Impact of Recent Changes Made to Auditor Reporting Standards
- CIPFA Recognition Revoked as an Audit Qualifying Body
- EY Found Guilty of Misconduct in the Audit of Tech Data