Fraud risks jump by 56pc in M&E sector over last two years

BANGALORE, INDIA: 56 per cent of respondents say the Indian Media & Entertainment (M&E) industry witnessed an explosive rise in fraud-related cases over the last two years, states EY's M&E Fraud Survey 2014 released today. One out of six respondents reported increased cases of fraud in their organizations

According to 83pc of respondents, kickbacks given for approval of talent-related and acquisition costs, carriage fees, Intellectual Property Rights (IPR) and satellite rights is another challenge faced by the industry. The effects of these hidden costs could see a far reaching adverse impact on the industry as well as the economy as a whole.

The survey features insights of key decision makers in the Indian M&E space - companies with domestic operations as well as Indian and global multi-national corporations. It also reveals content distribution and TV/film content production, finance and advertisement sales functions as particularly vulnerable areas. The survey also highlights a high risk of facilitation and unethical payment in segments which mandate government approval.

Mukul Shrivastava, Partner, Fraud Investigation & Dispute Services, EY said, "The war against fraud, bribery and corruption risks have leapfrogged and slices across sectors, geographies and economic conditions. Being on an upward trajectory, the Indian M&E sector is increasingly victimized by the growing challenges around governance breakdowns and unethical practices. This has led to extensive losses (monetary and reputational), sub-par performance and arrested development. In light of the changing industry dynamics, organizations will have to improve vigilance, boost internal controls and raise compliance benchmarks for sustainable growth."

Farokh Balsara, India Media & Entertainment Sector Leader, EY said, "As companies in the M&E sector increase in size and move from unorganised to organised operations, the need for proactive fraud prevention has increased. The adoption of an ethical business conduct and sound governance policies will play a crucial role in determining its true success."