73% of Finance Professionals Believe Enron-Scale Scandal Could Happen in the UK
The findings of a survey by document management software company, Version One (V1 Document Management's UK Sister company), highlight that three-quarters of senior finance professionals believe that a case of fraudulent activity on the scale of Enron could happen in the UK. Version One carried out the research with 190 senior finance professionals (finance directors and managers) across a range of public and private sector organizations.
The survey reveals that 73% of senior finance professionals believe an Enron-scale scandal could occur in the UK due to "poor controls, collaboration between unscrupulous employees and the ease in which paper documents can be modified". 73% also stated that someone in their organization would be able to tamper with or ‘lose' a document to suit their ends whilst 38% admitted that they had come across activity that could be considered fraudulent involving business documents. A quarter of these stated that they'd witnessed document fraud "a number of times".
Lynne Munns, General Manager of Version One, says, "The false accounting scandal at Enron proved devastating to its reputation and was directly responsible for the company's downfall. The lessons learnt from this case highlight the importance of managing risk by having effective document management systems in place."
Failing to retain financial documents can prove a tax well as a legal nightmare. In the UK, HM Customs and Excise as well as the Inland Revenue require the retention of numerous documents, with six years' worth of documents plus the current year being required for VAT purposes.
By using a document management system, documents cannot be shredded 'lost' and altered, eliminating the risk to an organizations reputation.
- Lynne Munns, Version One
In total, 76% of the survey’s 190 respondents feel that electronic document management would help to prevent fraudulent activity involving business documents. These respondents believe that such a system would improve security access levels making it more difficult to falsify data. Less likelihood of “missing” documents and tighter audit trails are amongst the other reasons put forward by respondents.
Munns comments, "By using a secure electronic document management system which tightly integrates into organizations' accounting and ERP systems, documents cannot be shredded, ‘lost' and altered, eliminating the risk of damage to an organization's reputation and ultimately, its bottom line. Ensuring the document management system is based on strict levels of authorization and is integrated into systems that maintain audit trails, also makes it an essential tool for preventing fraud."
