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Corporate bosses “pay lip service” to integrity standards – EY survey

Randy Mancini 7 Jan 12
Spread of the coronavirus disease (COVID-19) in London
FILE PHOTO: General view of Canary Wharf as the sun sets, as the spread of the coronavirus disease (COVID-19) continues, London, Britain, March 26, 2020. REUTERS/Toby Melville

January 12, 2022

By Kirstin Ridley

LONDON (Reuters) – Corporate leaders are prepared to pay lip service to integrity standards, overlook internal vetting processes and rationalise unethical behaviour in a battle for survival as the COVID-19 pandemic enters its third year, a global EY report says.

In a warning to corporate legal and compliance departments, EY said 18% of board members told the survey they would mislead auditors or regulators to improve their pay or bonuses, up from 14% in a 2020 report.

In addition, 17% would ignore unethical behaviour by third parties and 15% would falsify financial records.

More than half of those quizzed for the EY 2022 Global Integrity Report said they believed standards of integrity had either stayed the same or fallen over the last 18 months.

Just over two in five said the pandemic had made it harder to do business with integrity. Authorities have long warned that the turmoil caused by COVID-19 could lead to major fraud or corruption.

“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, adding remote working had raised the risk of fraud and unethical behaviour.

“Hybrid working makes it difficult to undertake effective compliance monitoring, and fraud risk factors typically increase at a time of crisis,” he said.

Some 42% of surveyed board members said unethical behaviour in senior or high performers was tolerated in their organisation.

Global market research agency Ipsos MORI interviewed 4,762 board members, managers and employees in some of the largest organisations and public bodies across 54 countries between June and September 2021.

They questioned staff at industries such as financial services, manufacturing and at public sector entities. Western and eastern European respondees accounted for 49% of answers.

(Reporting by Kirstin Ridley; Editing by Jan Harvey)