Rising competition, pressure to achieve unprecedented revenue targets, winning or retaining business contracts and financial gain are some of the reasons for companies to resort to unethical practices. Naturally, these issues have become a key concern for companies worldwide. In the midst of this where is your company positioned? Is it susceptible to fraud and online attacks? If so, than here is what you should know... In conversation with Dominic Rebello, Mukul Shrivastava, Partner, Fraud Investigation & Dispute Services, EY India explains the consequences of a company’s vulnerability to online attacks and how these can be nipped in the bud
How serious are fraud and corruption related issues in India?
Fraud and corruption related issues have become a key concern for companies worldwide. According to EY’s Global Fraud Survey 2016, “Corporate misconduct – individual consequences”, 58% of the respondents in India stated that bribery and corruption is widespread. An analysis of sentiment from previous years shows a gradual albeit positive shift in the perception though, having moved from 70% in 2012 and 68% in 2014. However, a lot needs to be done on-ground for any changes to resonate at a granular level to boost the economy.
To further drive this, the government is increasing transparency through new law and regulations. For instance, the provisions made in the Companies Act 2013arepositive, and aimed at improving the corporate governance standards in India. Augmented power and statutory status to Serious Fraud Investigation Office (SFIO) and increase seen in the enquiries driven by enforcement agencies such as Enforcement Directorate (ED), Anti-Corruption Bureau (ACB), Central Vigilance Commission (CVC) and Central Bureau of Investigation (CBI) are helping uplift the nation’s initiative toward a more optimistic stance for the future.
What is the impact of regulations on the demand for forensic services?
Rising competition, pressure to achieve unprecedented revenue targets, winning or retaining business contracts and financial gain are some of the reasons for companies to resort to unethical practices. However, increasing awareness, enhanced regulatory measures as well as focus on individuals’ accountability is driving a much needed changed. As a result, there is an uptick in in-house forensic professionals as well as external consultants.
New regulations to address and penalize instances of bribery and other irregular practices are still underway, but there have been steps taken by the government to improve governance standards in India. Laws such as the new Companies Act 2013, the Prevention of Corruption (Amendment) Bill (PoCA), 2013, introduced by Parliament (expected to be enacted in 2016), Lokpal and Lokayuktas Amendment Act and the Amendment to Whistle-blowers Protection Act, 2011 are expected drive transparency. This is fueling the need to companies to be compliant, proactively address fraud and corruption related risks and mitigate instances in the future, with the help of forensic experts.
What is the reason for lack of talent in the forensic space?
I wouldn’t say there is a lack of talent in the forensic space in India. With cases of corporate misconduct and irregular practices coming to the forefront, there is a high demand for forensic professionals to enable companies manage these threats. Currently, there would be about 4000-5000 professionals in India, but the need across in-house professionals as well as external consultants is much higher. The talent required to be part of the corporate forensic investigation space is fairly diverse. Professionals range from Chartered Accountants, MBAs, Certified Fraud Examiners (CFE), engineers or technology experts, lawyers and former police officers.
To drive good governance and enable growth of the ecosystem at large, the Association of Certified Fraud Examiners (ACFE) regularly conducts trainings and holds seminars all over the world. ACFE is a global anti-fraud organization and provider of training and education - the Western Region Chapter in India has undertaken numerous initiatives to strengthen the space in India. ACFE Western Region Chapter have in fact recently launched the Forensic Trailblazer Award, which is aimed to applaud the most accomplished forensic professional in India. Such platforms will not only provide international exposure and recognition to forensic experts in India, but also encourage individuals to choose this field as a career option.
How are Indian businesses tackling the issue? What needs to be done?
Fraud and corruption continues to pose significant risk, but leading companies are dealing with these threats head on. As a result, the corporate forensic investigation space which kick-started almost a decade ago, has now become a fast-growing business. EY’s forensic team has grown from 30 individuals in 2010 to the current 600+, and we plan to add another 100 professionals by the end of the 2016. Being on a high growth revenue path, we have worked with many companies in the last six years. We also have four Centres of Excellence (CoE) which support dedicated offerings such as eDiscovery and Managed Document Review, Third-party due diligence, Forensic technology, through two state-of-the-art labs located in Hyderabad and Mumbai and anti-money laundering.
Mukul Shrivastava, Partner, Fraud Investigation & Dispute Services, EY India, heads the Forensic Technology Discovery Services practice within FIDS India. He oversees the three technology divisions viz: Data Analytics, Digital Evidence Recovery and Software License Forensic and specializes in the Media & Entertainment sector. By Qualification he is a Chartered Accountant and Certified Fraud Examiner.