82 per cent of middle market firms in Yorkshire and the North East consider themselves at risk of falling foul of anti-money laundering and anti-bribery legislation according to the latest YouGov survey, commissioned by leading audit, tax and consulting firm RSM.
The survey of more than 300 UK middle market business leaders also revealed that 24 per cent of firms have suffered, unwittingly or otherwise, in incidents that are outside of the law.
Yet despite this, over half (52 per cent) of those questioned felt that non-financial reporting, the mechanism through which risk is minimised, is excessive or demanding – diverting major resources and hindering company operations.
Richard Smith, partner and head of risk assurance at RSM, said: ‘Our research suggests a worrying ‘cake and eat it’ mind-set within middle market business. On the one hand businesses recognise the major risks they face, yet on the other hand remain reluctant to fully engage in a process that minimises the risk and associated liabilities. Furthermore, if done well, it can engender stakeholder confidence and business value. Of course, in doing this business can also often gain a much broader competitive advantage.’
The report, entitled ‘Beyond the balance sheet – helping you bring governance into focus’ illustrates how financial metrics can no longer form the only yardstick of business success and covers a range of areas including anti-money laundering and bribery act compliance.
Carolyn Brown, head of client legal services at RSM said: ‘The past decade has seen a major shift in our understanding of what constitutes a well-run business. Performance measurement goes far beyond the company balance sheet. Good business ethics, and the ability to demonstrate those credentials through accountability and transparency are more important than ever before. In a tightening regulatory environment, outmoded thinking around non-financial reporting, or governance, will leave you and your organisation exposed.’
The report sets out how, through highlighting the key areas of non-financial reporting (NFR), organisations can set about addressing the governance.
Businesses are required to comply with a plethora of regulations and legislation* designed to stamp out fraudulent practices and improve business integrity. For the first time, the public, the media and employees have an open window into the inner workings of organisations via NFR metrics. The gender pay gap, equality and diversity, payment practices and measures to tackle modern slavery are some of the complex issues covered by NFR.
Empowered regulators and the public also scrutinise data use and abuse under the General Data Protection Regulation (GDPR) or via whistleblowing, with businesses required to self-police stakeholders to eliminate practices such as money laundering, bribery and tax evasion.