Part 1(B): Fraud and Corruption Prevention - Government Entities

What is the resilience of an entity in preventing, deterring, and detecting fraud and corruption?

Tempe, February 27, 2017

Technical Staff

As we stated in Part 1(A): Fraud and Corruption Prevention - Government Entities, there is not a cut-and-dry measurement for fraud and corruption risks. These risks should be addressed at the following levels: internally and externally.

The following questions and their respective answers would constitute a foundation for identifying and assessing the fraud and corruption risks attributed to the external environment of a government entity. The process should include the following factors:

• Constituents and customers
• Suppliers and creditors
• Public expectations of services
• State audit
• Local laws, rules, and regulations
• Society social norms, values, and culture
• Prevailing corruption or perceived corruption in the community / country

Constituents and Customers

1. Does the government entity have a documented current system to receive, process, and respond timely and appropriately to constituents and customers' suspected corruption complaints?
2. Does the government entity interact with its constituents and customers via social media platforms? If yes, does the government entity monitor its constituents and customers' perception of its integrity and ethical practices?

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Part 1(A): Fraud and Corruption Prevention - Government Entities

What is the resilience of an entity in preventing, deterring, and detecting fraud and corruption?

Tempe, February 27, 2017
Technical Staff

Where to Start?

A smart start at an entity to prevent fraud and corruption would be seeking an answer to the following question:

What is the current status of fraud and corruption in the government entity?

The answer to this question could be qualitative or quantitative. Qualitative responses, for example, could be very low, low, medium, medium-high, high, and catastrophic! Quantitative answers could be a point on a numeric or percentage scale.

This is what we call fraud and corruption risk identification, or sometimes we call it fraud and corruption risk mapping. Fraud and corruption risk is a business risk. Because it is a business risk, it should be embedded in the organization’s strategy. Needless to say that neither this risk nor the strategy is static: they are dynamic.

Fraud and Corruption Risks in a Government Entity

There is not a cut-and-dry measurement for fraud and corruption risks. These risks should be addressed at the following levels: internally and externally.

The following questions and their respective answers would constitute a foundation for identifying and assessing the fraud and corruption risks attributed to the internal environment of the government entity.

Are the elected public officials financially literate?

Is there an orientation program for senior officials and newly elected public officials

Is there an effective internal audit function?

Should circumstances warrant, does the government entity have effective and competent functions similar to those applied in its industry?

Does the government entity have effective compliance function?

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Fraud and Corruption Detection: Part 1 (D)

January 29, 2017

What is the resilience of an entity in preventing, deterring, and detecting fraud and corruption? 

Part 1(D) Fraud and Corruption Detection in a For-Profit Organization

Detection of fraud and corruption is directly related to fraud and corruption prevention and deterrence. While prevention of corruption is fundamentally based on anticipating what could or may go wrong, detection of fraud and corruption is principally designing and implementing policies, processes, and procedures to find out when fraud and corruption occur. Therefore, one will never systematically detect a fraud or corruption incident unless it was initially expected to happen. An effective internal control system is a partial answer for detecting fraud and corruption.

Presuming a proper tone is set at the top, the foundation of detecting fraud and corruption consists of the following pillars:

1.    Effective internal control system

2.    Effective corruption prevention policy

3.    Proper anti-corruption competencies of board members, executive management, and employees

4.    Effective support functions

As we will discuss each of these pillars separately in the anti-corruption series, the following section briefly discusses their fundamental importance and impact on fraud and corruption detection.

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Fraud and Corruption Deterrence: Part 1(C)

December 30, 2016

What is the resilience of an entity in preventing, deterring, and detecting fraud and corruption? 

Part 1(C) Fraud and Corruption Deterrence in a For-Profit Organization

Corruption is an illegal and immoral act of serious existential consequences on organizations. Whatever the cost of fraud and corruption deterrence mechanisms organizations use, it would be less costly than what they would suffer from the ramifications of uncovered and publicized case(s) of fraud and corruption. Fraud and corruption deterrence aims to:

1.    Set the proper tone at the top

2.    Increase the likelihood of detecting corrupt acts

3.    Heighten perpetrator's costs

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