Asia Economy

Is corporate Singapore being too naive on fraud?

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Singaporean corporations are more naive in their approach to anti-fraud and corruption practices in comparison to the Asia-Pacific average, a survey from global accountancy firm Ernst & Young has found.

According to the "Building a more ethical business environment survey," only 17 percent of Singaporean respondents acknowledged that planned investments in new markets will expose the company to new risks, compared to an average of around 35 percent for the Asia-Pacific region.

"Companies in Singapore don't necessarily lag behind in terms of anti-fraud and corruption practices; what we found is a disconnect between policies that companies already have in place and the enforcement of those policies," said John Tudorovic, fraud investigation and dispute services partner at Ernst & Young.

(Read More: Why Singapore's economy looks set for a contraction)

According to E&Y, nearly two thirds of Singaporean executives surveyed said their companies' anti-bribery and anti-corruption practices did not work well in practice, compared with an average of 48 percent for the Asia-Pacific region.

Furthermore, E&Y said their survey findings showed that a lack of regular training and management commitment to anti-bribery and anti-corruption policies was a cause for concern in Singapore.

Only 18 percent of Singaporean respondents said their management had strongly communicated their commitment to their anti-bribery and anti-corruption measures, compared with an average of 35 percent for the Asia-Pacific region.

Common procedures used to tackle fraud and corruption, such as whistle blowing and technology like forensic due diligence, were also not common practice in Singapore, the survey found.

(Read More: For foreigners, has securing a job in Singapore just gotten harder?)

While 71 percent of Singaporean companies said they would be prepared to advocate whistle blowing, whereby employees can report insider knowledge of fraud or corruption through a protected procedure, only 17 percent actually operate such schemes.

"Whistleblowers may inherently be concerned about the exposure of their identities and the potential repercussions, and to that end, employee education and management communication on whistle blowing schemes, is important in ensuring that these concerns are addressed for the schemes to be truly effective in practice," said Tudorovic.

How will Singapore firms deal with tapering?
How will Singapore firms deal with tapering?

Just over half of the Singaporean companies profiled use technology, like transaction monitoring or forensic data analytics, as a method for tackling bribery and corruption risk. Only 7 percent of Singaporean respondents said they viewed technology as the best way to tackle fraud.

"IT investments in most Asian countries are still seen as a cost and burden rather than a tool that can create valuable insights into the company's operations," said Tudorovic.

(Read More: Singapore jumps to second spot in global IPO activity)

However, where Singapore did come up trumps was in its ability not to let volatile and challenging market conditions alter existing efforts to enforce anti-bribery and corruption measures.

An average of 27 percent of Asia-Pacific respondents said management was likely to take shortcuts to meet targets in harsh economic conditions. But only 11 percent of Singaporean respondents said this was the case in their companies.

Singapore was home to one of the most infamous insider trading scandals in the 1990s, when rogue trader Nick Leeson's speculative trading racked up over 800 million pounds ($1.29 billion at today's exchange rate) in losses and led to the collapse of Barings Bank.

A KPMG survey conducted in 2011 investigating attitudes to fraud in Singapore found that more than one in five companies in Singapore experienced some kind of fraud between 2008 and 2011.

—By CNBC'sKatie Holliday: Follow her on Twitter @hollidaykatie