Companies Act, rise in frauds to change India Inc approach: Ernst & Young
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The Companies Act 2013 and a rise in cyber crime and technology frauds will change the way Indian companies operate in the domestic environment, says a report.
"Most recently passed Companies Act 2013 is expected to be a game changer for India Inc and will improve anti-bribery and anti-corruption practises," global management consultancy Ernst & Young said in report.
The Act highlights additional responsibilities and role of independent directors, increased powers of the SFIO in tightening corporate governance measures in the country. "These, and many other developments in the fraud space in India are expected to change the dynamics of how companies will operate in India," the report said.
Ernst & Young India's Arpinder Singh, partner and national leader- fraud investigation and dispute services, said, "Organisations will be compelled to rethink their business strategies and evaluate stringent measures to de-risk themselves by institutionalising a holistic framework that fosters transparency, promotes an ethical culture and sustains profitability in the long run."
The report said 2014 will see Indian corporates conducting business operations in a more ethical manner, with a heightened focus towards compliance.
It further said that companies will need to undertake a thorough due diligence procedure before forging any relationship with the third parties.
"This could be related to their background, track record and reputation and check on the possibility of any undisclosed relationships," report said.
The report said that there has been a phenomenal increase in electronic data, and accessibility has made controlling fraud extremely challenging. Fraudsters have become extremely tech savvy, and so cybercrimes are as common as traditional financial frauds, which poses a threat.
"In 2014, forensic data analytics will play a critical role to mitigate fraud in organisations," the report added.
The report further said in 2014, HR will need to manage a broader mandate and will be entrusted with laying the foundation of an ethical culture.