Data key in bat­tling business cor­rup­tion

China Daily (Canada) - - SHANGHAI - By WU YIYAO in Shang­hai wuyiyao@chi­

Chi­nese com­pa­nies can use im­prov­ing foren­sic data an­a­lyt­ics in the fight against cor­rup­tion, ac­cord­ing to re­cent re­search by Ernst & Young.

Eric Young, part­ner and Greater China foren­sic tech­nol­ogy leader for EY’s Fraud In­ves­ti­ga­tion and Dis­pute Ser­vices, said cor­po­ra­tions can rely on data sources that are rapidly grow­ing to con­duct com­merce.

The lat­est data tools have en­hanced anal­y­sis beyond tra­di­tional meth­ods of re­view­ing doc­u­ments. They are able to vi­su­al­ize out­liers of data that may serve as early warn­ings to clients, en­abling them to take ac­tion be­fore fraud or cor­rup­tion can oc­cur.

The re­port stated that this un­der­stand­ing will use data to help de­tect po­ten­tial in­stances of fraud, and im­ple­ment ef­fec­tive fraud risk-mit­i­ga­tion pro­grams.

EY con­ducted a survey of 2,719 ex­ec­u­tives glob­ally, in­clud­ing 50 from China’s main­land and 50 from Hong Kong, be­tween Novem­ber 2013 and Fe­bru­ary 2014. Par­tic­i­pants said bribery and cor­rup­tion re­mained wide­spread in many coun­tries around the world, and Chi­nese com­pli­ance risks were still high amid grow­ing com­pe­ti­tion and slower eco­nomic growth.

China’s business ex­ec­u­tives show more will­ing­ness to break the law. About 46 per­cent of Chi­nese re­spon­dents said they were will­ing to pay cash to win or re­tain business; the global av­er­age was 13 per­cent. More than 20 per­cent of polled CEOs said they had been asked at least once to pay bribes in or­der to win or re­tain a business.

Aca­demics say the si­mul­ta­ne­ous ex­is­tence of three pre­con­di­tions is usu­ally present when fraud oc­curs: fi­nan­cial pres­sure, op­por­tu­nity and ra­tio­nal­iza­tion, re­ferred to as the “fraud tri­an­gle.

Diana Shin, part­ner at EY’s Fraud In­ves­ti­ga­tion and Dis­pute Ser­vices, says the fraud tri­an­gle has been seen in many coun­tries and re­gions, es­pe­cially when eco­nomic growth has slowed.

Young said that gen­eral ledgers, ac­counts payable, travel and hos­pi­tal­ity ex­penses, so­cial me­dia, email, cell phone data, hu­man re­sources and sales force data can all play a role in de­tect­ing fraud. For in­stance, a meal bill with ex­tra-long hours may sig­nify sus­pi­cious ac­tiv­ity. An ex­pense en­try from a date when an em­ployee was on va­ca­tion could also draw scru­tiny from au­di­tors.

Chi­nese en­ter­prises have been aware of the im­por­tance of strength­en­ing an­ticor­rup­tion and fraud preven­tion. The ones that have taken ac­tion have en­hanced per­for­mance, ac­cord­ing to Young. He said that an in­creas­ing num­ber of en­ter­prises have re­al­ized that proac­tive mea­sures can sig­nif­i­cantly re­duce cor­rup­tion and fraud risks and have ex­tended bud­gets to op­ti­mize their com­pli­ance sys­tems.


“Wis­dom City” in­for­ma­tion ex­hi­bi­tion is on dis­play dur­ing the Beijing In­ter­na­tional De­sign Week. Big data could be used in var­i­ous ar­eas from so­cial life to the fight against cor­rup­tion.

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