Survey compliance

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Compliance and Transparent Practices Survey in 300 largest companies in Argentina

Center for Governance and Transparency

Hotel Emperador 4.15.2010

Buenos Aires, Argentina

Copyright © 2010 IAE Business School. All rights reserved.

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Survey 2010

Quantitative Study of

Transparent Practices and Compliance in large companies in Argentina

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Transparent practices in leading companies in Argentina – Quantitative

study

Survey conducted by

IPSOS - Mora y Araujo

Date November 23, 2009 – February 12, 2010

Universe300 largest companies by revenue in

Argentina.

Sample 104 cases

Method Online, phone interviews

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Sample structure (I)

Number of companies by business sectors

Number of companies by business sectors

71

15

14

Industry andServices

Technology andCommunications

Finance

Ownership Ownership

68

18

14

Privately-owned

company

Publiccompany

listed on onestock

exchange

Publiccompany

listed on morethan one

stockexchange

Base: 104 cases.

Source: Survey “Transparent Practices in Argentina” - Ipsos Mora y Araujo

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Sample structure (II)

Type of companyType of company

61

38

2

Multinationalsubsidiary

Independentlocal company

Subsidiary oflocal company

Base: 104 cases.


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Opinion on Compliance and Transparency

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Importance of Compliance

In your opinion, how important is the issue of compliance for competing in Argentina? In your opinion, how important is the issue of compliance for competing in Argentina?

In the industryIn the industry In the companyIn the company

Very Important

Important

Barely important

Not important1

26

36

37

3

16

28

53

81%

19%

73%

27%

Base: 104 cases.

Source: Survey “Transparent Practices in Argentina” – Ipsos Mora y Araujo

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Indicators

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Elements of Compliance

Existence of a formalized code of conductExistence of a formalized code of conduct

Training Training

Specific auditsSpecific audits

Existence of hotlines for whistleblowersExistence of hotlines for whistleblowers

Existence of help hotlinesExistence of help hotlines

Existence of a formalized, comprehensive compliance programExistence of a formalized, comprehensive compliance program

Existence of role of Compliance Officer Existence of role of Compliance Officer

74%74%

65%65%

61%61%

56%56%

49%49%

48%48%

38%38%

14,4

12,5

6,7

7,7

9,6

12,5

15,4

21,2

No element

One element

Two elements

Three elements

Four elements

Five elements

Six elements

All elements


98%98%

68%68%

94%94%

70%70%

82%82%

84%84%

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0 to 2 elements0 to 2 elements3 to 4 elements3 to 4 elements5 to 7 elements5 to 7 elements34%34%17%17%49%49%

¿Which elements are in place?

¿Which elements are in place?

Formalized code of conductFormalized code of conduct Yes (83%)Yes

(83%)

Formalized compliance program

Formalized compliance program

Yes (3%) Yes (3%)Yes (22%)Yes

(22%)

Yes (88%)Yes (88%)

Compliance OfficerCompliance Officer Yes (0%) Yes (0%)Yes

(11%)Yes

(11%)

Yes (73%)Yes (73%)

TrainingTraining Yes (17%) Yes (17%)Yes (72%)Yes

(72%)Help hotlinesHelp hotlines Yes (6%) Yes (6%)Yes

(44%)Yes

(44%)Yes (80%)Yes (80%)

Hotlines for whistleblowersHotlines for whistleblowers Yes (6%) Yes (6%)Yes (50%)Yes (50%)Yes (92%)Yes (92%)

Specific AuditsSpecific Audits Yes (14%)Yes (14%)Yes(72%)Yes(72%)

Distribution of Compliance elements amongst companies

Yes (88%)Yes (88%)

Yes (100%) Yes (100%)

Yes (96%)Yes (96%)

Yes (31%) Yes (31%)

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Aspects of Compliance Programs

Identify the main aspects included in your company’s program

Base: Business firms with a formalized program (50 cases) – Source: Survey “Transparent practices in Argentina” – Ipsos Mora y Araujo

Compliance programs by year of introduction

Compliance programs by year of introduction

32

20

18

4

26

2005 to2009

2001 to2004

1995 to2000

1990 to1994

Before 1990

AspectsAspects

Business Ethics/Codes of Conduct/Transparent Practices

Finance/Accounting transparency

24%24%

18%18%

Health-, security-, and environment-related policies 16%16%

Third party relationships 16%16%

Compliance with internal and external norms 12%12%

Conflicts of interests 18%18%

Fraud policy/Illegal payments 10%10%

Information confidentiality and privacy 10%10%

Internal control/Personal conduct/Protection of company assets

14%14%

Business risk 8%8%

Good business practices 8%8%

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Role of Compliance Officer

Base: 104 cases - Source: Survey “Transparent practices in Argentina” – Ipsos Mora y Araujo

)

NoNo

60%60%

Don’t KnowDon’t Know

Existence of Compliance Officer

Existence of Compliance Officer

YesYes

38%38% 2%2%

Full-time/Part-time Compliance OfficerFull-time/Part-time Compliance Officer

Base: Business firms with a Compliance Officer (39 cases)

Part-timePart-timeFull-timeFull-time

38%38%62%62%

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Responsibilities Responsibilities To whom reportsthe Compliance Officer

To whom reportsthe Compliance Officer

Responsibilities of a Compliance Officer

Which are the three main activities the Compliance Officer is responsible for in your company?

Base: Companies with a Compliance Officer (39 cases)

Source: Survey “Transparent practices in Argentina” - Ipsos Mora y Araujo

Compliance with internal and external norms

Audits / internal control

24%24%

22%22%

Code of conduct compliance 21%21%

Offer practical information and training on code of conduct.

21%21%

Disseminate the compliance program’s goals

18%18%

Report on unethical behavior 13%13%

Identify operational risks 11%11%

Lead all compliance-related initiatives 9%9%

Review of norms and guidelines 8%8%

Compliance program execution 10%10%

49

13

10

9

9

9

18

CEO

CFO

Legal AffairsDirector

RegionalCompliance officer

Vicepresident

Officers abroad

Others

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Impact of the Compliance Officer

How much impact would you say the Compliance/Ethics Officer has in your organization?


Source: Survey “Transparent practices in Argentina” – Ipsos Mora y Araujo

59

31

10

0

High impact

Some impact

Low impact

No impact

90%

10%

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Cooperation amongst Compliance OfficersTo what extent is the cooperation amongst Compliance Officers from different companies

relevant? It is…



36

44

15

5

Very relevant

Of somerelevance

Barely relevant

Not relevant atall

80%

20%

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Training in codes of conduct and transparent business policies

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Training in Business Ethics

Do you develop or have developed training for employees concerning your company’s business ethics and

transparency policies?

Do you develop or have developed training for employees concerning your company’s business ethics and

transparency policies?

Base: (104 cases) – Source: Survey “Transparent practices in Argentina” – Ipsos Mora y Araujo

Base: Companies that have in place training programs (68 cases)

Training developmentTraining development

Have the trainings been performed face-to-face or online? Have the trainings been performed face-to-face or online?

Types of TrainingTypes of Training

YesYesNoNo

65%65%34%34%

Don’t knowDon’t know

1%1%

Face-to-faceFace-to-face

InternetInternet

BothBoth

29%29%

22%22%

49%49%

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Unethical behavior and risk assessments

To what extent would you say that unethical behaviors fall within the scope of your company’s risk assessment processes?

Base: 104 cases.


41

35

17

7

A lot

Some

Little

At all

76%

24%0 to 2 3 to 4 5 to 7

40% 17% 16%

Number of elementsNumber of elements

19

Integrity Pacts

Do you know or are you aware of the existence and implementation of

integrity pacts?

Do you know or are you aware of the existence and implementation of

integrity pacts?

Base: 104 cases.


Knowledge of the InstrumentKnowledge of the Instrument

YesYesNoNo

18%18%79%79%

Don’t KnowDon’t Know

3%3%

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How to improve Compliance Programs

38

11

12

16

9

2

9

1

1

1

78

58

42

35

32

26

20

2

1

1

1

1

Training for company's employees

Code of conduct extension to thirdparties

Compliance programs

Tighter regulations

A more powerful Compliance Officer

More responsibility for external auditors

Integrity pacts

Compliance with regulations

Awareness creation in society

A tighter system of rewards andpunishments

Tighter sactions and higher fines

All important

1st mention All mentions*

Which of the following are for you the three most important issues to improve the development of compliance practices in Argentina?

Which of the following are for you the three most important issues to improve the development of compliance practices in Argentina?

Base: 104 cases.


6767 5 to 7 elements

5 to 7 elements

4545 5 to 7 elements

5 to 7 elements

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Analysis and conclusions

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Positive Aspects

– 100% of surveyed companies are working and/or interested in the subject– Compliance issues are considered important to compete in the industry (73%)

and in the company (81%)– Codes of conduct are in place in 74% of companies– Compliance program implementation growing strongly: 32% (2005-2009)– Training in 64% of companies, mainly performed face-to-face and online.– Specific audits in 61% of companies– Hotlines for whistleblowers in 56% of cases– The role of the compliance officer (CO) has high impact in companies’ practices (90%)– The CO directly reports to the CEO in 49% of the cases– Unethical behavior in the scope of risk assessment processes in 76% of the companies

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Opportunities for Improvement

• Percentage of companies with less than three elements of compliance is high

• Few compliance programs elements in medium- and small-sized business firms

• Low number of formalized, fully-implemented compliance programs (48%)

• Low number of Compliance Officers positions (38%)

• Legalistic approach in defining role of Compliance Officers

• Lack of information/knowledge of integrity pacts (18%)

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Conclusions

• Business firms’ sensitivity is growing • Certain factors accelerate the sensitivity to these issues• There is a “drainage” effect from larger to smaller (including medium-sized)

companies • Companies implement compliance elements “one by one”• The more important elements to enhance compliance programs are:

– training (78%); – extension of codes of conduct to third parties (58%; among companies

with a full compliance program, 67%); – more compliance programs (42%);– higher importance of the CO position;– cooperation amongst COs (80%).

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Center for Governance and Transparency

Professors:Matthias KleinhempelLorenzo PreveFernando Zerboni

Coordinator: Gabriel Cecchini

IAE Business School – Austral UniversityCampus Pilar - Buenos Aires - ArgentinaContact: [email protected] / www.iae.edu.ar/transparencia

Survey compliance

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