Internal Control: What Those Charged with Governance Should Know

Tempe, October 31, 2017; Technical Staff

This document is a part of The AACI series of anti-corruption resources made available to our CACM members . The contents of this document constitute an integral part of the CACM Review textbook that would be available in countries where the CACM will only be offered by exam. 

Those charged with governance should have proper and adequate anti-corruption intelligence to prevent and deter corruption and avoid negligence or gross negligence in performing their duties. 

The AACI defines anti-corruption intelligence as: 

" the minimum, optimum knowledge a decision maker should have to avoid fraud and corruption intelligently. Such knowledge includes the proper blend of due diligence, internal controls, anti-corruption, governance, decision making, process auditing ( from a management perspective and duties) to avoid anti-corruption and fraud. By avoidance, we emphasize the concept of deterrence and prevention.  Corruption prevention is less expensive and better than any cure."

Internal control is a pillar of anti-corruption intelligence. Regardless of her background, a decision maker should master the concept of internal control. This mastery should include, at the minimum, the executive summary of Internal Control - Integrated Framework. 

We issued "Introduction to Internal Control" in October of this year and emphasized the importance of the control environment component of internal control.  It is the foundation of other internal control components. It is unfortunate that too many decision makers and board members have misconceptions about internal control. 

Delusions of internal control include, but not limited to, the following: 

• Internal control is the policies and procedures of an organization.

• Internal control is not directly related to preventing, deterring, and detecting fraud and corruption.

• Internal control is not required in small and medium-sized (SMEs) entities.

• Internal control is not related to business risks.

• Good governance is not related to internal control.

• Strategic management is not related to internal control.

• Internal control is not related to the board responsibilities.

• Accountability, transparency, and responsibility are not related to internal control.

• Compliance is not part of internal control.

• Expenditure on internal control is a waste of resources and expense.

• Internal control is static.

• Internal control prevents and detects every fraud and corruption event.

The more widespread these misconceptions among decision makers of an organization, the higher the corruption risks and business failure. 

Why do we call these assertions and beliefs "misunderstandings about internal control"? 

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The AACI to start teaching sixth Royal Discussion Paper

Amman, August 8 (Petra) — The American Anti-Corruption Institute (AACI) will be teaching the content of His Majesty King Abdullah II’s sixth Royal Discussion Paper: “Rule of Law and Civil State” at the universities which the AACI cooperates with globally, said Mike Masoud, senior director of The AACI in the Middle East and Africa.

He told Petra, on the sideline of Bright Jordan company delivering its Anti-Corruption certificate, that AACI considers the sixth Royal Discussion Paper as a primary anti-corruption resource in developing countries.

“This Discussion Paper is a prerequisite to any effective national anti-corruption strategy”, he added. Masoud stated that awarding this certificate for a local Jordanian company working in the healthcare sector is considered a precedent in the Middle East in terms of implementation of anti-corruption and transparency measures. He added that Bright Jordan is an international pioneer in the field of medical protection and preservation of medical tourists’ and patients’ rights.

CEO and founder of Bright Jordan, Amid Sabri, said that Bright Jordan certification by the AACI as the first in the Middle East and North Africa region reaffirms the company’s commitment to the ethical and transparency standards within healthcare services.

He added that the core foundation of this certification is built on the principle of financial and operational transparency. Bright Jordan does not receive any fees or commissions from healthcare providers. This is essential to preserve the integrity of our professional role as a healthcare consultant providing total medical protection and achieving best results within minimum costs.

Sabri confirmed that such certification has a positive impact on the Jordanian economy through boosting trust in the local healthcare industry and promoting Jordan as a unique destination for medical tourism.

The sixth Discussion Paper was based on several principals among which: The rule of law is a foundation for effective management and eliminating nepotism or “Wasta” as the core of the civil state.

//Petra// YK 

8/8/2017–04:03:01 PM

Remarks by World Bank Group President Jim Yong Kim at the World Government Summit

World Bank Group President Jim Yong KimInclusive Governance: The Foundation for Building Human Opportunity and ProsperityDubai, United Arab Emirates

As Prepared for Delivery
February 8, 2016
The speech of Dr. Jim Yong Kim at the World Government Summit is remarkable and touched on several crucial and critical socioeconomic issues that are directly related to preventing fraud and corruption. Quality leadership, good governance, among other things, are always needed for sustainable development. It is our belief that this speech should be a pillar of any kind of good governance.
As good governance is not a new phenomenon, we quote part of what Dr. Kim mentioned in his speech:

" Governments that operate in opaque, exclusive and unaccountable ways, or fail to empower local authorities, often plant the seeds of discontent. When governments don’t allow the public to participate in decisions, they breed suspicion; when governments make decisions on the basis of favoritism, social or ethnic divisions, discrimination or corruption, citizens become deeply aggrieved."
"The demands for good governance, in fact, are not a recent phenomenon. The demands are rooted in the traditions and history of many cultures, including the Arab and Islamic world.  The scholar Imam Muslim recounted words said by the prophet, quote, “One whom I appoint to a public office must render account on everything, big and small.” The Arab philosopher Ibn Khaldun wrote in his opus, the Muqqaddimah, that the social compact between the individual and tribes was a sacred bond based on mutual accountability, protection, and proper and reliable delivery of such basic services as security and justice.  Ibn Khaldun said the worst kind of state is a tyranny wherein government usurps property rights and rules with injustice against the rights of men."
"Another inspiring figure to me is the Palestinian intellectual and writer Edward Said. His book Orientalism, which is largely about how Westerns perceive the East, had a profound impact on my thinking. He also focused on the power of good governance. He once wrote, and I quote:

“Power, after all, is not just military strength.  It is the social power that comes from democracy, the cultural power that comes from freedom of expression and research, the personal power that entitles every Arab citizen to feel that he or she is in fact a citizen, and not just a sheep in some great shepherd’s flock.”"

Read the complete speech.