By Daniel Hunter

Only 17% of UK accountants believe the UK Bribery Act 2010 has given confidence to small and medium-sized businesses (SMBs) that they will not have to compete with or encounter corrupt business practices, a research report from ACCA (the Association of Chartered Certified Accountants) reveals today (Tuesday).

Combating bribery in the SME sector: the UK findings polled ACCA’s UK membership to revisit original research conducted in 2007.

The new results show that almost one in five accountants believe that businesses have been more willing to mis-state financial statements to cover-up for corruption and fraudulent activity since the onset of the financial crisis.

When asked about effective measures to counter bribery and corruption amongst SMEs, 71% said high profile prosecutions would help, compared to 67% five years ago. The research also revealed more wanting to see laws granting whistle blowing rights - with 61% in 2013 compared with 42% five years ago.

Rosana Mirkovic, head of SME Policy at ACCA, says: “We know that SMEs are not immune from the risks of bribery and corruption and in many ways, they can be more exposed. Central to dealing with these risks is knowledge and access to guidance.

“Compared to our 2007 survey, a larger number of participants now believe there is sufficient guidance to help SMEs identify and deal with bribery and corruption — 27 per cent compared to just six per cent in 2007. But despite the improvements, this still indicates low awareness levels that need to be addressed.

“It is also a concern that only 43% of respondents believe bribery risk is routinely considered by SMEs when thinking of doing business internationally, despite almost half of respondents believing bribery and corruption is most likely to manifest in the negotiation of contracts involving cross-border trade.”

The report includes a foreword from Robert Barrington, Executive Director of Transparency International UK. Robert Barrington comments: “This is a timely and important study. It helps to fill an important gap in debates around the Bribery Act by giving us more information about the experiences and opinions of SMEs. It tells us that awareness is increasing in the SME sector, although there is still a lack of knowledge and understanding in some parts. It reinforces the need for anti-bribery support and guidance specifically aimed at the SME sector.

“Above all, ACCA’s survey reveals that the Bribery Act represents an opportunity as well as a challenge for SMEs, strengthening the view that SMEs can benefit from the free market and clean business environment that anti-corruption laws help to create.”

Key findings from the 2013 research show:

· 51% think the UK Bribery Act 2010 has not increased confidence, perhaps because of lack of awareness of its provisions, with respondents divided on whether compliance with the Act has added to SMEs’ cost
· Only 35% think UK SMEs are aware of the Act’s provision that firms carrying on a business in the UK themselves commit a criminal offence if acts of bribery are committed by their employees or other associated persons and they fail to take adequate measures to prevent that happening;
· 64% think SMEs see bribery and corruption as having a negative impact on the business environment;
· Only 27% think SMEs are unlikely to face any risk of bribery and corruption in their business dealings, and almost half — 48% — think they are definitely likely to do so;
· 75% believe SMEs would welcome advice and guidance from their accountants on the policies and practices they should put in place to mitigate the risks of bribery and corruption on SMEs
· 49% of 2013 participants still do not think there is sufficient guidance about bribery and corruption available for SMEs.

Rosana Mirkovic adds: “What is also interesting to note is that just over half of respondents do not think that anti-bribery laws should incorporate a modified regime for SMEs, seeing value in maintaining one framework for all businesses, regardless of size. This is an important message to the UK Government who is thought to be currently considering relaxing how some aspects of the UK anti-bribery are applied to SMEs.”

ACCA’s UK research is accompanied by a global report which looks at the attitudes of bribery and corruption in a number of countries and regions, including Sub-Saharan Africa, Singapore and Central and Eastern Europe.
Compared to the rest of the world, the UK is most sceptical about SMEs’ understanding of the legal frameworks for bribery and corruption, with only 24% considering that SMEs understand the legalities, compared to 68% of those in Central and Eastern Europe, which is the least sceptical region surveyed globally.

Rosana Mirkovic concludes: “We conclude from this research that there is work to be done by the accountancy profession and by policymakers to instil confidence, and help SMEs identify the risks they face, especially when it comes to trading internationally.”

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