Content thumbnail Shifting into High Gear: Mitigating Risks and Demonstrating Returns

The United States Securities and Exchange Commission (SEC) and Department of Justice continue to lead the way in robust domestic and extraterritorial enforcement actions. The SEC’s Financial Reporting and Audit Task Force is now deploying cutting-edge FDA tools to mine data for fraud and is engaging whistle-blowers in unprecedented numbers to uncover financial reporting and disclosure problems. “ At the SEC, we have made great strides in leveraging data and technology to detect and pursue misconduct. In the enforcement arena, the Commission US$4.2b is using data analytics to help identify wrongdoers and conduct streamlined investigations to optimize our resources.” SEC Chair Mary Jo White, opening remarks at the 21st Annual International Institute for Securities Enforcement and Market Oversight, 2 November 2015 monetary remedies in this past fiscal year Outside the United States, regulators in the United Kingdom, Germany, Italy and France, among others, have been involved in major enforcement actions. In Asia, prosecutions for corruption are increasingly frequent, with China leading the way. Parallel investigations are also becoming more common, with the European Commission and Japanese regulators teaming with their US counterparts on cartel investigations. Cross-border cooperation among prosecutors is strong and will only strengthen as emerging markets, including India, Brazil and many Asian countries, pass anti-bribery/ anti-corruption legislation or take steps to bolster their enforcement efforts. Increased urgency by C-suites to adopt FDA The cost of getting it wrong is becoming too grave to ignore. Facing the severity of fraud risks and the threat of regulatory enforcement, C-suite respondents have a stronger sense % of urgency around FDA adoption than other executives. Overall, 69% of respondents agree 74 with the statement: “We need to do more to improve our current anti-fraud procedures, including the use of FDA tools.” But this percentage jumped to 74% for the C-suite cohort. of C-suite In addition, 31% of respondents say one of the main reasons to increase FDA investment respondents is pressure from the board or management team. They also cite corporate executive “ We need to do more to improve management and the board as the first- and third-highest beneficiaries of FDA activities, our current anti-fraud procedures, moving up from second and fifth, respectively, two years ago. including the use of FDA tools.” “ As we look toward COSO guidance around conducting fraud risk assessments as part of an effective internal controls framework, we will see a strong emphasis on the use of forensic data analytics.” Vincent Walden, Partner, Forensic Technology & Discovery Services, FIDS US, EY 10 | Global Forensic Data Analytics Survey 2016

Shifting into High Gear: Mitigating Risks and Demonstrating Returns - Page 10 Shifting into High Gear: Mitigating Risks and Demonstrating Returns Page 9 Page 11