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Why aren’t ethical standards improving?


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In response to increasing pressure from regulators, investment in compliance programs across the region is at an all-time high. Yet ethical standards show few signs of improving.

Our 2017 survey findings show that compliance policies and processes are not translating into ethical conduct, despite increasing numbers of APAC companies putting these compliance elements in place.

More than four in five (83%) respondents report organizational efforts to combat fraud, bribery and corruption have been expanded (51%) or sustained (32%) in the last two years, with an upward trend in the percentage of organizations with ABAC policies and codes of conduct.

After some countries, such as India, introduced legislative requirements for whistleblower provisions, the region has also seen a 6% jump in organizations with whistleblowing hotline programs. Three in five (61%) respondents report that their organizations now have hotlines in place.

Yet, despite this investment in expanding the compliance framework, more than half of our respondents (52%) still feel ethical standards have not improved in their organizations. More than two-thirds (69%) say they have had information or concerns about misconduct in their company. This is higher than findings in the EY Fraud Survey 2017 for Europe, Middle East, India and Africa (EMEIA), where only 52% of respondents expressed similar concerns.

The percentage of respondents who had seen people with questionable ethical standards being promoted rose to 43% — up from 40% in 2015. More than a third (35%) say it is still common to use bribery to win contracts.

Clearly, more compliance investment isn’t translating into more ethical conduct. Our 2017 survey findings suggest that this is because:

  • 1. Standards are not being applied consistently
  • 2. Compliance lacks clarity

“When organizations promote people with questionable ethical standards, their behavior becomes contagious. These people replicate this practice, which they’ve rationalized as being acceptable, throughout their new team and misconduct spreads.”

 

Diana Shin, Partner, Fraud Investigation & Dispute Services, China

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