Anti-Corruption Programs Face Closer Inspection in 2011 Amid Growing Enforcement Activity

Ernst & Young LLP Cites Key Compliance Expectations for the Coming Year

Dec 07, 2010, 09:00 ET from Ernst & Young

NEW YORK, Dec. 7, 2010 /PRNewswire/ -- As companies return to growth, new risks related to fraud and corruption will emerge, bringing compliance to the forefront for boards of directors, audit committees and senior management of global companies, according to professionals in Ernst & Young LLP's Fraud Investigation & Dispute Services practice.

"In 2011, the ability to anticipate, respond and adapt to threats will be more essential than ever when it comes to developing an effective and sustainable risk management program," says Brian Loughman, Leader of Ernst & Young LLP's Fraud Investigation & Dispute Services practice. "Organizations must not only recognize increased risks of fraud and corruption, they need to proactively implement appropriate changes to internal programs at all levels to promote compliance. Re-evaluating current anti-corruption framework will be critical for all businesses as they look for ways to protect themselves from these evolving challenges in the upcoming year."

According to Ernst & Young LLP and based on recent changes in the regulatory landscape – such as increased enforcement of the U.S. Foreign Corrupt Practices Act (FCPA) and more stringent oversight in Europe and the U.K. – the following five trends will appear in 2011 as the competition in emerging markets increases and risk continues to grow:

  1. Whistleblowers, now entitled to up to 30 percent of an assessed penalty in the event of a $1 million or greater recovery under the Dodd-Frank Act to report fraud outside of the organization, may directly contact the Securities Exchange Commission. In addition, certain law firms will likely seek to assist whistleblowers in the process.
  2. Companies will need to adjust to robust enforcement standards following adoption of the U.K. Bribery Act, due to be enforced in April 2011.  The Act will cover all transactions conducted globally by any commercial organization that carries on business in the U.K.
  3. As anti-corruption enforcement continues to increase, forensic analytics will become more advanced as the fraud investigation process grows to be equally, if not more, important as investigation results. We can expect to see new forensic innovations and techniques, beyond traditional rules-based tests, that integrate text mining and statistical analysis to detect patterns, high-risk terms and anomalies in financial accounting data.
  4. Global companies will continue to evaluate their current third-party, anti-corruption due diligence programs and many will begin to take a more risk-based approach as Federal law looks to prohibit companies convicted of FCPA violations from contracting with the U.S. government. In 2011, an organization's general counsel's office will work closely with its internal auditors to integrate anti-bribery and corruption controls testing into their field audits.
  5. The U.S. Department of Health & Human Services Office of Inspector General will begin to examine and scrutinize off-label uses as anti-corruption regulation begins to grow within the pharmaceutical industry.  

About Ernst & Young's Fraud Investigation and Dispute Services

Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to achieve your company's potential. Better management of fraud risk and compliance exposure is a critical business priority – no matter the industry sector. Our more than 1,000 fraud investigation and dispute professionals around the world bring the analytical and technical skills needed to quickly and effectively conduct financial investigations, quantify economic damages, and gather and analyze electronic evidence. Working closely with you and your legal advisors, we assemble the right multidisciplinary and culturally aligned team, and bring an objective approach and fresh perspective to these sensitive and contentious situations – wherever you are in the world. And because we understand that, to achieve your potential, you need a tailored service as much as consistent methodologies, we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide. It's how Ernst & Young makes a difference.

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