Market pressures drive more misconduct

Investigations Insider | As employees continue working from home, little oversight creates more opportunity for misconduct

Kyle Thompson

Kyle Thompson

Director Advisory, Forensic, KPMG US

+1 770-314-8531

COVID-19 caused an unprecedented lockdown around the globe. This resulted in a massive logjam in supply chains, creating immense pressure on companies depending on imports and exports for the success of their business. Raw materials are in short supply, and closed borders and customs delays have interrupted the shipment of goods. The pressure for public companies to meet analyst expectations and keep stock prices from falling drives companies to do whatever they can to survive. Because of these pressures, KPMG Forensic has seen an increase in cases related to allegations of bribery and corruption. We are seeing situations in which companies are selling goods they don’t have in order to meet sales targets. In addition, we are also seeing companies push unsold products to third parties by threatening existing relationships and forcing the third parties to purchase products that are not needed.

As employees continue working from home, some feel there is little oversight of their actions as compared to when they were in the office. This creates more opportunity for misconduct. Due to this perception, companies must ensure there is control over improper payments, have testing protocols in place, and conduct frequent risk assessments. With companies struggling to maintain profits, the gridlock of the supply chain, and minimal scrutiny in the work-from-home environment, the pressure and opportunity for bribery and corruption is significant. Employee rationalization, however misplaced, is simply survival.

To thrive, leading organizations must devote effort and resources to ensure they have appropriate and effective compliance programs and controls processes in place. Establishing a control framework for managing regulatory and compliance risk is critical to a culture of integrity. Whether building controls to support a new or improved business platform, or reacting to a regulatory issue, it is important for organizations to make sure they have comprehensive programs in place to meet the rigorous universe of state, federal, and international laws, regulations, internal company policies, and contractual requirements.

An effective compliance program must be embraced by all parts of an organization and operates best in a framework with strong governance, robust risk identification and mitigation processes, and a properly functioning and resourced compliance function. KPMG has developed a Compliance Transformation framework to help organizations address “the new normal” of constant regulatory changes and challenges. The potential benefits of this approach begin with improved compliance effectiveness and can extend to building a compliance culture that is driven by strategy and embedded in the organization’s governance, planning, and operations. External and in-house legal counsel tasked with responding to allegations of business wrongdoing must prepare now for the impending wave of litigation and law enforcement and regulatory investigations. Please reach out to KPMG Forensic for assistance with proactive risk assessments, remediating the risks to prevent violations, or conducting an accounting analysis in a current investigation to mitigate the negative impact to your client’s business and help shape your defense.

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Fraud allegations require a swift response and skilled resources. When fraud occurs in a global setting, it is essential to perform a thorough investigation.

Fraud allegations require a swift response and skilled resources. When fraud occurs in a global setting, it is essential to perform a thorough investigation.