Bribery Act: how will you act? UK Bribery Act 2010 survey results – April 2011
‘The CIMA member can define the practice, implementation, monitoring and reviewing of anti-bribery practices, as well as help push such legislation up to national and regional policy levels to help ensure a global level playing field.’
About CIMA The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with 183,000 members and students operating in 168 countries, working at the heart of business. CIMA members and students work in industry, commerce and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its qualification, professional experience requirements and continuing professional development to ensure it remains the employers’ choice when recruiting financially-trained business leaders. CIMA is committed to upholding the highest ethical and professional standards of members and students and to maintaining public confidence in management accountancy. CIMA believes that sustainability is a key issue for all organisations across the world and is committed to supporting its members and students in addressing this challenge. For more information, please see www.cimaglobal.com/ethics and www.cimaglobal.com/sustainability
1 | Bribery Act: how will you act?
‘The Bribery Act includes many of the expected ethics standards of CIMA professionals.’ In the final quarter of 2010 CIMA surveyed its members globally to understand how they and their respective companies were preparing for the introduction of the UK Bribery Act. An online survey was emailed to CIMA members and published on the web for completion. Responses were received from 218 members who were employed across all industry sectors including those working in the extractive, construction, pharmaceutical, retail, finance and defence sectors.
‘Everyone in our company is affected as employees – we all have responsibility.’
Summary actions: • Self-brief on the requirements of the Act and raise awareness with colleagues, management and key contacts. • Ensure you are prepared by referencing existing guidance or consulting on what would best constitute adequate procedures for implementation in your organisation. • Review, revise and monitor policies, risk assessment, compliance practices and training programmes. • Revisit these to identify any remaining gaps or loopholes. • Undertake third party due diligence where necessary. • Ensure your anti-bribery measures are documented correctly, making sure the relevant information is available to the right people when they need it. • Ensure they are proportionate, consistent and applied in an open and transparent way. • Keep reinforcing the messaging and demonstrating your commitment. • Seek formal advice if you are unsure.
Bribery Act: how will you act? | 2
What Act? Limited awareness With the majority of respondents representing members from the UK and Europe (85%), and just over 10% from Asia, a third were not aware of the new Act. Over 40% were not aware of the international jurisdiction for any company with a formal UK presence and nearly half were not aware that individuals could face prosecution and imprisonment. Of all the respondents, almost 60% did not feel their organisation was prepared for the new Act. Awareness and implications of the Bribery Act
67%
Aware of the new Bribery Act Aware that the Bribery Act affects a company with a UK presence, even if offences take place in another country and are unrelated to UK operations
59%
Aware that individuals, if found guilty can be imprisoned for up to ten years and/or fined
Company prepared for the new Bribery Act
47%
43%
CIMA members – recognising their role ‘As ethics is a key part of being a CIMA member, the Act will impact all roles.’ A third of all respondents recognised their roles would indeed be directly affected by the new Act and nearly half were not sure, or to what extent their roles would be affected. Given this, selfbriefing, together with wider awareness raising across organisations, was acknowledged as critical. As CIMA members undertake a range of corporate roles, including many of strategic importance to the business, the breadth of their respective responsibilities to address implications of the Act was evident.
‘As CFO, I will be deemed responsible for any breach in my area.’ Members with senior roles such as financial directors, CFOs or those with particular board liaison functions understood their responsibility for corporate compliance and financial governance. They also understood that breaches of the Act within their organisation could have personal consequences for them as directors.
‘Our company interacts with third parties and brokers and potentially the relationships could be open to abuse.’
3 | Bribery Act: how will you act?
Compliance procedures are common areas of responsibility for CIMA members, as well as inputting into risk assessment and revising risk policies. Internal audit and monitoring are other areas of CIMA member engagement, involving them in both revising processes and ongoing inclusion of relevant procedures in response to the Act.
‘I am leading the risk assessment, introduction of new policies, and monitory and reporting processes.’ ‘Our future internal audits will include consideration of any exposure to UK Bribery Act.’ Will your current role be affected by the new Bribery Act? Yes – 32%
Not sure – 45%
No – 24% For those members who are not yet familiar with the Act and for those whose companies are not yet prepared, it is strongly recommended by CIMA that they brief themselves, their leaders and their peers. Less than half of respondents felt their company was prepared. A key role for senior management and the board is ensuring they are familiar with guidance on adequate procedures, either by exerting direct influence on those responsible for the governance of the organisation or by raising the issue with their line managers and CFOs. Embedding an anti-corruption culture and practical related systems, controls and processing together with relevant training is all part of best practice.
‘It should be the responsibility of all employees to monitor behaviour, ensure compliance and identify loop holes.’ For those who were aware of the Act, and could report on the steps taken to date by their employers, most companies (73%) had updated policies and assessed risk (65%) in light of the new legislation. Briefing (38%) and training (23%) was still low, and up to 10% of respondents had not recognised that any steps had been taken by their employer in addressing the Act. Four in ten had put compliance and monitoring programmes in place and had taken professional advice on the Act.
Bribery Act: how will you act? | 4
What steps has your company taken to prepare for the Act? Updated policies including anti-corruption and anti-bribery procedures
73%
Assessed risk
65% 42%
Taken professional advice Put compliance and monitoring programmes in place
39%
Briefed all staff and related subsidiaries/agents
38%
Trained all staff and related subsidiaries/agents None that I know of
23% 11%
With 62% of respondents searching information online, the majority of members were sourcing informal information on the Bribery Act. Nearly half (45%) would seek advice from external legal advisors with just one third consulting internal advisors. How would you get more information about the Bribery Act? 62%
From the web From legal advisors
45%
From internal advisors
38%
From the UK Ministry of Justice Not sure
13% 7%
What next: how to enact the Act? When asked to consider what key roles a CIMA member can play in supporting implementation and best practice around the Act, raising awareness and educating others came out very strongly. This acknowledged the need by respondents to not only familiarise themselves further with the Act but to also encourage in-house training, briefings and messaging, alongside more technical activities such as revisiting and designing appropriate risk and compliance policies.
‘Members should communicate to the non-financial areas of their business on how the Act can affect them both as an individual and the company as a whole.’ In relation to communicating the importance of the Act, respondents recognised the ethical and professional considerations of being a CIMA member, by encouraging organisation wide awareness and understanding of its implications. Some also recognised the importance of raising the awareness of wider stakeholders such as clients, vendors and those in the supply chain. It was also important to be particularly vigilant to the activities of those potentially susceptible by bribery.
5 | Bribery Act: how will you act?
Respondents were aware of the necessity and practical action required to gain an understanding of how the Act may impact on their particular organisation whilst also implementing relevant procedures in order to ensure awareness and compliance.
’Ensuring access to risk management tools, understanding localised requirements of implementation and measuring effectiveness are all ways CIMA members can support the Act.’ Issues of hospitality, gift giving and receiving and procurement methods were stated as areas that would need explicit consideration and reference in policies. Some also expected to revisit whistleblowing procedures. The need for senior management and executives to understand the scope and implications of the Act, and to take action accordingly, was also seen as imperative. This underlined the need for a strong ethical corporate culture and tone from the top.
‘I see my role as reinforcing the message of high ethical standards, providing advice and guidance to colleagues, ensuring financial controls are adequate and highlighting areas of risk exposure.’ In addition to legal advice and internal advisors, CIMA members would also look to CIMA to signpost them to updates and information on the Act, given it has international jurisdiction.
Further background In April 2010, the UK Bribery Act was passed into law. The Act provides UK law enforcement with a sound legal framework to prosecute offenders. It has far reaching implications for every company doing business in the UK and potentially creates the toughest enforcement regime in any jurisdiction. It includes a new corporate offence of failing to prevent bribery. Following the release of the government’s official guidance on adequate procedures, the new Act is expected to take force later in 2011. Offences include: • general offences of offering or receiving a bribe • a special offence of bribing a foreign public official • a corporate offence of failing to prevent bribery.
‘Bribery can happen anywhere, so being mindful with those you communicate with as well as those you transact with, is something all members can do.’ Also see: Ministry of Justice: http://www.justice.gov.uk/publications/bribery-bill.htm Transparency International: http://www.transparency.org.uk/working-with-companies/ adequate-procedures CIMA, together with Global Witness have produced a briefing on the Act: www.cimaglobal.com/briberyact
Bribery Act: how will you act? | 6
Chartered Institute of Management Accountants 26 Chapter Street London SW1P 4NP United Kingdom T. +44 (0)20 7663 5441 E. cima.contact@cimaglobal.com www.cimaglobal.com
CIMA World Conference 2011 24 - 25 October 2011 | Cape Town SA
PS004V0311