South: More than a third of companies have been exposed to 'illegal incidents'

85% of middle market firms in the south 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 31% of firms in the South have suffered, unwittingly or otherwise, in incidents that are outside of the law.

 

Yet despite this, 53% 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."

 

In the more extreme cases, 97% of businesses operating in the construction sector and 86% of businesses in Scotland felt at risk from both money laundering and bribery and/or corruption. Yet in both cases 62% of those businesses considered the associated monitoring and reporting requirements to be excessive or demanding.

 

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."