Financial Crime World

Regulating Relationships Between Companies and External Institutions to Combat Economic Crime

Introduction

A recent study on economic crime in Poland has highlighted the need for greater vigilance in regulating relationships between companies and external institutions. The research analyzed the dynamics of Poland’s gross domestic product (GDP) from 2003 to 2011, finding that while Poland’s economy was relatively resilient during the global financial crisis, economic crime remained a significant threat to businesses.

Forms of Economic Crime in Poland

According to the study, the most common forms of economic crime in Poland were:

  • Misappropriation or embezzlement of assets (80%)
  • Fraud (56%)
  • Falsifying financial data and accounting manipulation (13%)

The average loss incurred by a Polish enterprise was around USD 460,000, significantly lower than the global average of USD 1,700,000.

The Impact of Economic Crime

The study found that while economic crime was prevalent in Poland, its impact on the economy was likely to be greater due to the widespread falsification of accounts data. A report by the Association of Certified Fraud Examiners (ACFE) in the USA revealed that unfair financial reporting caused significantly higher losses than embezzlement of assets.

Recommendations

To combat economic crime, the study recommends:

  • Strengthening relationships between companies and external institutions
    • Appointment of statutory auditors to ensure transparency and accountability
    • Disclosure of company information to prevent fraud and other illegal behaviors
  • Implementing effective measures to regulate accounting policies and financial statements
    • Supervising accounting policies and financial statements to reduce potential criminal practices and other illegal behaviors

Key Statistics

  • 54% of Polish enterprises reported at least one incident of economic crime in the two preceding years (PwC, 2005)
  • The percentage of entities reporting economic crime increased from 60% in 2003 to 67% in 2006 (Deloitte, 2006)
  • Misappropriation or embezzlement of assets was the most common form of economic crime in Poland (80%)
  • Falsifying financial data and accounting manipulation was a frequent malpractice, noted in about 13% of Polish companies
  • The average loss incurred by a Polish enterprise due to economic crime was around USD 460,000

Conclusion

The findings of this study are a timely reminder of the need for businesses and regulatory bodies to work together to prevent economic crime and ensure transparency and accountability. By implementing effective measures to regulate relationships between companies and external institutions, Poland can help protect its economy from the devastating effects of economic crime.