Deloitte Poll: Securities Litigation Fears Escalate As Compliance, Internal Audit Professional Ranks Decrease
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NEW YORK, Dec. 7, 2009 – In a recent Deloitte online poll of business professionals across various industries, 37.5 percent say they are at least as concerned and 18.2 percent say they are more concerned about their company becoming a target of securities litigation as they were two years ago. Fueling this fear may be the fact that 27.4 percent of respondents report losing headcount in the compliance and internal audit function over the past 18 months.
Despite the reported decrease in the number of compliance and internal audit personnel, 49.7 percent of respondents believe their compliance and business ethics programs are strong and an additional 36 percent say they are adequate.
“With reduced headcount levels within compliance and internal audit, many organizations won’t realize that they are not implementing sufficient fraud prevention programs until it is too late,” said Kerry Francis, leader of the Corporate Investigations practice for Deloitte Financial Advisory Services LLP. “Executives and boards need to take a close look at their controls to mitigate litigation risks, because what worked prior to the financial collapse may not be adequate today.”
Surveyed about which activities would most benefit their organization to reduce corruption and fraud risks, respondents cited more fraud awareness training (32.4 percent); expansion of internal audit monitoring procedures (23.1 percent); more robust fraud risk assessment
(18.3 percent); and more oversight from the board and audit committee
(7.5 percent).
“Company-wide fraud awareness training can be an extremely effective risk management tool, yet many organizations typically shy away from this activity since it can be time-consuming and difficult to organize,”
said Brian Huchro, principal, Deloitte Financial Advisory Services.
“When you’re trying to keep a vigilant eye on risk management, employee training, particularly in a down economy, is just too important to cross-off the list.”
During a September 2009 Deloitte webcast on litigation risks resulting from mismanagement during a downturn, more than 1,790 business professionals from the financial services, consumer and industrial products, technology, media and telecommunications, banking and securities, health care and life sciences, public sector, and energy and resources industries responded to the poll questions.
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As used in this document, “Deloitte” means Deloitte Financial Advisory Services LLP and Deloitte Services LP, separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
Tags: business ethics, Compliance, deloitte, deloitte poll. compliance, internal audit, securities litigation
