According to EY Global Integrity Report 2022.
While a record number (97%) of survey respondents agree that integrity is important within their organization, 41% say the COVID-19 pandemic is making it harder to act with integrity in relationships commercial.
The survey, which collected the opinions of more than 4,700 employees, managers and directors from 54 countries and territories, revealed that leaders struggle to create and communicate a strong and effective culture of integrity within their business.
Andrew Gordon, EY Global Forensic & Integrity Services Leader, said: “The COVID-19 pandemic has had a serious impact on business integrity standards around the world. Changing ways of working throughout the COVID-19 pandemic have created an increased risk of fraud and unethical behavior. Hybrid working makes it difficult to implement effective compliance oversight, and fraud risk factors typically increase in times of crisis as companies and individuals face more financial pressures.
Growth of compliance programs, but inability to address unethical behavior
Over the past 12 months, investment in integrity and compliance initiatives has increased: 53% of responding organizations have a code of conduct in place, up from 47% 18 months ago. There is also an increase in training programs, with 46% of companies providing regular training on relevant legal, regulatory or professional requirements, up from 38% in 2020.
However, the survey highlights that this increased investment is not effectively communicated and that senior management is often overconfident in the effectiveness of their corporate integrity programs. For example, while 60% of board members surveyed say their organization has communicated the importance of acting with integrity frequently over the past 18 months, less than a third (30%) of employees surveyed remember seeing communications on the subject.
There is also a gap between the opinions of board members and employees regarding awareness of work from home policies (80% vs. 51%) and awareness of training on workplace regulations. data privacy (52% vs. 35%).
In addition to a lack of awareness, there appears to be a limited understanding of the critical importance of integrity beyond compliance with rules and regulations. Only a third (33%) of respondents say that an important characteristic of integrity is behaving according to ethical standards.
Ethical behavior – an internal disconnect
The survey highlights another behavioral disconnect. There seems to be a willingness among the most senior leaders to act outside of compliance rules. Board members who were surveyed in the research were five times more likely than employees to falsify financial records (15% vs. 3%) and six times more likely to say they would be willing to mislead external third parties such as auditors (18% vs. 3%).
Build compliance programs fit for purpose
The survey also examines respondents’ views on data protection and privacy. Regulation in these areas has been the subject of new legislation in recent years and 61% of respondents agree that this is beneficial for business.
Results for Romania
In Romania, 67% of those who took part in the survey believe that it is very important to be able to demonstrate that their organization operates with integrity, slightly above the average for Eastern countries (65%). 75% of respondents also indicated that the general public in Romania has higher expectations than before about how people should behave at work.
Clarisa Tesu, Head of Forensic and Integrity Services at EY Romania, said: “It is very encouraging to see that most respondents (52%) said that integrity standards have improved. improved in Romania over the past 18 months, with 45% saying they have stayed the same, while only 3% think they have gotten worse.For this statistic, Romania is among the countries with the most positive responses .
Rather worryingly, 23% of respondents said they would be willing to engage in various forms of misconduct (including falsifying financial records, engaging in unethical behavior, offering/accepting a bribe or deception from external parties such as auditors or regulators), if it meant they could improve their own career development or compensation.
Clarisa Tesu, Head of Forensic and Integrity Services at EY Romania: “The business economic environment has changed dramatically over the past two years, during which we have all faced many challenges, both operational than organizational. Our clients have unfortunately encountered a wide variety of compliance and integrity issues, ranging from cases of non-compliance with internal procedures to more complex cases of embezzlement and misappropriation of assets. Even the best compliance systems can be breached if there is no culture of integrity. People, not systems, end up committing fraud. That’s why building a strong culture of integrity is as important as implementing compliance procedures and controls.
A clear area for improvement would be the area of whistleblowing, as only 62% of respondents believe they can safely report wrongdoing without facing retaliation. In comparison, in more developed countries, 69% of respondents feel safe.
However, 63% of respondents in Romania say they have NEVER reported misconduct concerns, either to management or via a World Bank hotline (behind the Eastern European average of 67% of respondents ). Additionally, 36% of respondents had concerns about misconduct but did not report it and 58% of those who reported misconduct felt pressured not to report it. Additionally, even when properly reported, only a minority of respondents (49%) agree that their companies have taken action against employees who violate integrity standards.
Clarisa Tesu, Head of Forensic and Integrity Services at EY Romania: “These results highlight the need to improve the internal structure for reporting deviations and to promote a culture of integrity and transparency within the organization. With the transposition of European Directive 2019/1937 on the protection of whistleblowers, organizations with more than 250 employees will have to set up a confidential reporting channel, deal with reported discrepancies within 3 months and protect whistleblowers. alert against any reprisals.
Additionally, 56% of Romanians surveyed believe that the Covid-19 pandemic has made it more difficult for organizations to conduct business with integrity.