EY Guidelines for Identifying and Reporting Potential Financial Fraud

Introduction

At EY, maintaining the highest standards of integrity and transparency is paramount. This document provides guidelines to help employees identify potential financial fraud, report it appropriately, and implement preventive measures to safeguard our organization.

Common Red Flags of Financial Fraud

Employees should be vigilant for the following indicators that may suggest potential financial fraud:

1. Inconsistent Financial Records: Discrepancies between financial statements, ledgers, and supporting documents.
2. Unusual Transactions: Transactions that are inconsistent with normal business operations, such as large cash transactions or frequent adjustments to accounts.
3. Pressure to Meet Financial Targets: Employees expressing undue pressure to meet financial goals or deadlines, which may lead to unethical behavior.
4. Lack of Documentation: Missing or incomplete documentation for significant transactions or expenses.
5. Changes in Behavior: Employees exhibiting unusual behavior, such as becoming secretive, defensive, or overly aggressive when discussing financial matters.
6. Complexity and Obscurity: Use of complex financial structures or transactions that are difficult to understand or explain.
7. Frequent Changes in Accounting Policies: Sudden changes in accounting practices or policies that are not well-justified.
8. Inadequate Internal Controls: Weaknesses in internal controls, such as lack of segregation of duties or insufficient oversight.

Reporting Procedures

If you suspect potential financial fraud, follow these reporting procedures:

1. Document Your Observations: Keep a detailed record of your observations, including dates, times, individuals involved, and specific incidents that raised your concerns.
2. Report to Your Supervisor: If you feel comfortable, report your concerns to your immediate supervisor or manager. They are responsible for addressing such issues and can escalate them as necessary.
3. Use the Whistleblower Hotline: If you are uncomfortable reporting to your supervisor or if the issue involves them, use EY’s confidential whistleblower hotline. This hotline is available 24/7 and allows for anonymous reporting.
4. Follow Up: After reporting, you may follow up to ensure that your concerns are being addressed. However, respect the confidentiality of the investigation process.

Preventive Measures

To help prevent financial fraud, employees should adhere to the following practices:

1. Understand Internal Controls: Familiarize yourself with EY’s internal control policies and procedures. Ensure compliance with these controls in your daily activities.
2. Promote a Culture of Integrity: Encourage open communication about ethical behavior and integrity within your team. Foster an environment where employees feel safe to report concerns.
3. Regular Training: Participate in regular training sessions on fraud awareness, detection, and prevention. Stay informed about the latest trends and tactics used in financial fraud.
4. Conduct Regular Audits: Support and participate in regular audits and reviews of financial processes and controls to identify and rectify potential vulnerabilities.
5. Encourage Transparency: Advocate for transparency in financial reporting and decision-making processes. Ensure that all transactions are properly documented and justified.
6. Be Aware of Conflicts of Interest: Recognize and disclose any potential conflicts of interest that may arise in your work. Avoid situations that could compromise your objectivity.

Conclusion

By being vigilant and proactive, we can collectively help prevent financial fraud at EY. Remember, if you see something suspicious, it is your responsibility to report it. Together, we can uphold the integrity and reputation of our organization.