Fraud, corruption and corporate misconduct has seen a spike worldwide in recent times. For rapidly growing economies, transparency and ease of doing business are pivotal to attracting investments. According to the Economic Survey of India 2017 by the Organization for Economic Co-operation and Development (OECD), India is now the fastest-growing G20 economy. From a business standpoint, new regulations are enhancing the ease of doing business, boosting investor confidence, generating trans-national trade opportunities and restoring public confidence.
As per EY’s EMEIA Fraud Survey 2017, Human instinct or machine logic – which do you trust most in the fight against fraud and corruption? , 52% of the respondents in India said that regulatory activity has had a positive impact within their company as well as industry. Market sentiment remains buoyant but the challenges related to fraud, bribery and corruption still pose a hurdle for corporate India —78% of the survey respondents said that bribery and corruption are widespread in India, compared to 51% globally. While India’s perception has seen a marginal albeit positive shift over the past two years, there is much to be done to infuse ethics as an indispensable part of an individual’s as well as an organization’s DNA.
Role of Boards and Independent Directors
The role of an organization’s board of directors and independent directors has seen a tectonic change in the past couple of years. The responsibilities of boards and independent directors have grown manifold, and they have become a beacon for senior management treading on the path of sound governance. The past few years have seen boards and independent directors becoming crucial in various aspects of an organization’s life cycle —being custodians of governance, cultivating the right tone at the top, driving compliance in spirit and in form, advising senior management in matters of ethical and sustainable growth as well as reporting concerns about unethical behavior, and actual or suspected fraud. They are also entrusted with monitoring related-party transactions, whistle-blowing mechanisms and fraud response plans under various laws.
A rapidly transforming business environment would induce all stakeholders to relook and rethink their current strategies and responsibilities.
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