The complexity of today's business operations is opening the door to corporate fraud in the UK, according to a survey released today by ACL Services Ltd. The Financial Management 2007 study surveyed over 60 audit and financial executives in the UK and Germany, and highlights how inherent contradictions in managing financial data creates a confused environment where non-compliance and fraudulent activity can go unchecked and unnoticed.
Financial Management 2007 found that while over 77 percent of respondents agreed a single view of all relevant financial data was vital to effectively meeting today's corporate governance requirements, less than a quarter of organisations have this complete picture - leaving many of the companies surveyed vulnerable to inefficiencies and fraud. Yet, despite this, 81 percent still feel confident of being able to meet financial compliance and governance obligations.
Further contradictions and challenges highlighted in the survey:
* 84 percent of respondents agreed that continuously monitoring
the internal controls of key business processes would ensure operational and financial integrity, but only 43 percent were planning to do so, or had deployed these techniques
* 57 percent currently perform financial audits either quarterly
or annually, and only 27 percent say they would like to carry out audits more frequently (such as daily or weekly). This is despite an awareness of the benefits of reacting promptly when internal controls are not working as intended.
Of the companies surveyed, 42 percent do not know how long a suspect transaction outside internal control parameters could go unnoticed, and nearly one third believe an anomaly could go unnoticed for more than six months.
Commenting on the survey results, Liz Maloney, regional director of EMEA for ACL, said: "These results illustrate the true complexity of managing financial data across organisations. While many financial professionals acknowledge the challenges, many appear unable to implement the organisational changes necessary - despite the clear business benefit.
"The majority of executives surveyed believe they have effective processes in place but by not continually monitoring their financial transactions, UK organisations are leaving themselves open to fraudulent activities and organisational inefficiencies which can severely impact the bottom line."