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Regulators 'continue to probe'

Posted by: Laurence Simons 04/10/13

Just as small birds continue to eat fleas from elephants and broadsheet journalists go on with writing finger-wagging editorials about tabloids while still including as much salacious detail as possible, the UK's regulators have maintained their probing of financial irregularities within the business world.

Not only should this give us a warm glow as we witness the circle of nature spin lazily in the autumn sun, it also means in-house lawyers need to keep up their efforts to prevent firms from falling into fraudulent errors.

EY's Fraud Investigation and Dispute Services report found UK businesses and executives have already been fined over £166 million by the many acronyms that exist to mete out such punishments, staffed by teams of stolid, shovel-jawed investigators who never accept the offer of a cup of tea and a biscuit.

The organisation revealed 76 per cent of all investigations and 93 per cent of the fines identified in the past six months were directed at financial services firms and personnel, suggesting the focus on this sector has not abated over the last six months.

John Smart, head of EY's fraud team, said: "With the Sentencing Council proposing changes to guidelines that would make England and Wales one of the toughest regimes in the world for fraudulent activity and other corporate offences, directors and board members must ensure that their houses are kept in order."

He urged firms to put in place strong risk management systems and system reviews if they wish to avoid falling foul of the eagle-eyed regulators.

In-house lawyers should play a big part in formulating these schemes, particularly if they wish to emphasise their importance at boardroom level.

Of course, if businesses were to take Mr Smart's advice on board and become entirely free of fraud, all these acronyms would cease to exist, leaving the children of auditors across the UK with coal in their stockings this Christmas.

These symbiotic mysteries of nature should not be pried into, however - some things are best left alone.