SMEs in the dark about bribery and corruption
Bribery and corruption are just as likely to affect SMEs (Small and Medium Sized Enterprises) as large companies, yet only one fifth of SMEs feel able to distinguish between bribery and corruption or corporate hospitality and facilitation fees, a research report from ACCA (the Association of Chartered Certified Accountants) reveals today.
The report – called Bribery and corruption: the impact on UK SMEs – is the first insight into how SMEs are affected by the issue, and reveals a fundamental uncertainty amongst SMEs about what bribery and corruption amounts to in practice.
Over two-thirds (69%) of respondents to the survey agree that SMEs are likely to be confronted with bribery and corruption in the course of their business dealings, yet fewer than half thought that SMEs understand the law in this area.
Specific findings from the survey include the following:
- Seventy per cent of respondents said the potential for bribery and corruption exists in all commercial dealings.
- Almost two thirds (63 per cent) agreed cross border negotiations could fall foul of bribery and corruption, while a similar percentage (64 per cent) thought it could arise as a result of pressures from the supply chain.
- Fewer than half (46 per cent) considered that SMEs would be able to differentiate between contract-related consultancy or facilitation fees and bribery and corruption.
- Sixty-two per cent said there was not enough suitable guidance to help SMEs deal with issues relating to bribery and corruption
- Sixty seven per cent of respondents thought that successful, high-profile convictions would have the greatest impact in terms of raising awareness of bribery and corruption in the UK with a further 43 per cent believing that professional and trade associations could also play important roles.
- Just over half of respondents (51 per cent) believed that SMEs were unaware that UK law enables UK courts to hear cases of bribery and corruption even where the acts complained of are committed abroad.
- And when it comes to seeking advice and guidance on bribery and corruption, 42 per cent of respondents believed SMEs would turn to their lawyer, 29 per cent to their accountant and almost a fifth (19 per cent) said they would turn to no one for advice.
John Davies, ACCA’s Head of Business Law, said: "Bribery and corruption are ills which are usually associated with business dealings involving large companies and public bodies and with particular sectors of the economy. But clearly the competitive pressures which can generate bribery and corruption exist at the SME level too. It must not be forgotten that SMEs make up the great majority of all UK businesses."
He concluded: "SMEs may even be more vulnerable to such practices because of their isolated market position or lack of in-house financial awareness. While our survey does not suggest that concern about bribery and corruption is a major day-to-day preoccupation in the SME sector, it does show that SMEs are certainly aware of the risks of bribery and corruption and are keen to improve their defences against them.
"But knowledge gaps appear to be a significant issue. The survey shows that accountants can play a vital role in helping SMEs to do this. ACCA is keen to engage with regulators and other SME stakeholders to improve the quality of support given to SMEs in this area."
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Notes to editor
1. ACCA is the largest and fastest-growing international professional accountancy body and has 296,000 students and 115,000 members in 170 countries.
2. The research for Bribery and corruption: the impact on UK SMEs was carried out by ACCA’s technical department in October 2006. The sample consisted of two main groups of ACCA members – those actually working in SMEs as accountants or general managers and those in public practice who provide professional services to SMEs. Responses were received from 558 members.
3. The main objective of the survey was to gauge perceptions of how the issues associated with bribery and corruption affect the SME community.
For further information please contact:
Helen Thompson, ACCA Press Office 020 7059 5759 / 07725 498 654