MUMBAI: In the last two years, the Indian Media and Entertainment industry has seen a stark increase in fraud related cases that have contributed to a major loss in profits as well as increased costs according to EY's Media and Entertainment (M&E) Fraud Survey 2014.
Commenting that the Indian M&E sector has been increasingly victimised, EY partner, fraud investigation and dispute services Mukul Shrivastava said, "Being on an upward trajectory, the Indian M&E sector is increasingly victimised 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."
Of the total respondents, approximately 98 per cent said that unethical practices had led to a major loss in profits and at the same time had increased costs. One out of six respondents also said that they had seen an increase in fraud within their organisations.
Another serious issue that the survey reported was false invoicing and overbilling. Shrivastava went on to add that “In light of the changing industry dynamics, organisations will have to improve vigilance, boost internal controls and raise compliance benchmarks for sustainable growth.”
An astonishing 57 per cent of the respondents are yet to set up a whistle blowing mechanism within their organisations and 41 per cent do not have much knowledge about anti corruption laws and regulation laws.
EY India M&E sector leader Farokh Balsara 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.”
The report also outlined ways for organizations in preparing a strong fraud management programme through regular training, awareness programmes, interactive sessions with case studies and scenarios.
The survey features insights of companies with domestic operations as well as multinational corporations. It also reveals content distribution and TV/film content production, finance and advertisement sales functions as particularly vulnerable areas.