Only 4% of Canadian finance executives could justify unethical behaviour in an economic downturn – significantly fewer than 36% of global respondents in an EY survey. With Canada’s economy still struggling to rebound from slumping oil prices and a weakened dollar, that’s good news.
Further, Canadian execs are also less willing to act unethically to meet the pressures of financial targets. This includes offering entertainment, personal gifts or services, cash payments or misstating performance. Nearly three quarters don’t believe any actions are justified to meet financial targets, versus just over half the global respondents.
When it comes to different unethical actions executives could justify, Canadians didn’t support extending monthly reporting periods, backdating contracts or booking revenues prematurely. However, they were slightly more open to changing assumptions to determine valuations or reserves and more flexible product return policies.
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“Although Canada consistently ranks better than other countries, one-third of Canadian respondents believe bribery and corrupt practices happen widely in business in Canada,” says Mike Savage, EY’s Fraud, Investigation and Dispute Services Leader. “This is 10% more than last year.”
Not enough is being done
Nearly all Canadian respondents (92%) believe that prosecuting individual executives would help deter fraud, bribery and corruption – something that doesn’t happen enough, according to the survey. One-third of Canadians believe their government is willing to prosecute cases of bribery and corruption, but does not seem effective in securing convictions.
Whistleblowing
Whistleblowers remain a critical source of information on alleged misconduct. Regulators welcome such tips, and in some jurisdictions, including Canada, whistleblowers are offered substantial monetary rewards. Unlike financial executives from around the world, Canadians don’t believe loyalty to the company or to colleagues would prevent them from reporting an incident in their company.
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“A robust whistleblowing policy may be a surprisingly effective tool to combat unethical behaviour in Canada,” says Savage.
Other key findings
- Cyber risk is at the top of Canadian financial executives’ agenda; 72% recognize cyber as a risk (versus 47% globally);
- 44% are doing less due diligence than last year on country-specific risks (versus 36% globally); and
- 32% of Canadian companies are doing less due diligence than last year on industry-specific risks (versus 27% globally).