For treasurers and other finance managers who've spent theircareers in the United States, bribery and corruption may seemfar-removed from reality. But for those who are responsible forfinancial management in other parts of the world, an insularattitude may be setting them—and their companies—up for someunpleasant surprises. A recent global study by Ernst & Youngtitled “Navigatingtoday's complex business risks: Europe, Middle East, India, andAfrica Fraud Survey 2013” reveals that some activities whichseem taboo to most businesspeople in the United States are not asuncommon in the developing world.

“Sometimes it's a challenge for U.S.-based finance managers ortreasury folks who have never worked abroad to understand thatpeople in their foreign subsidiaries may have a completelydifferent perspective on how the world works,” says Brian Loughman,Americas leader for fraud investigation and dispute services withErnst & Young. “That can lead to attitudes that could be veryprevalent in India or Africa but would be incomprehensible to theaverage American. The culture will have an impact on howtransactions get recorded. It will have an impact on the level ofdetail that gets recorded in the system, on what people think of asbeing normal, and on what people think is important versus whatthey think isn't important.”

The survey polled more than 3,000 board members, executives,managers, and employees in 36 countries around the world. Inrapid-growth markets, 26 percent of respondents have heard ofpeople “cooking the books” in their company within the past year;see Figure 1, below. In the developed world, this number is half aslarge, although among respondents from all regions of the globe, 42percent of board members and 24 percent of finance staff are awareof occurrences of financial manipulation in their organization.