November 6, 2024
Introduction: Corruption and Public Sector Auditing
Corruption is defined as the abuse of entrusted power for private gain, including bribery. Corruption erodes trust, weakens democracy, hampers economic development and further exacerbates inequality, poverty, social division and the environmental crisis. Exposing corruption and holding the corrupt to account can only happen if we understand the way corruption works and the systems that enable it.1 2
Corrupt conduct can take many forms including: conflicts of interest taking or offering bribes, misuse of public funds, dishonestly using influence (influence peddling), bid-fixing, blackmail, fraud, theft, embezzlement, tax evasion, forgery, and, nepotism and favouritism.
The audit profession aids public sector organizations in achieving accountability and integrity, enhancing operations, and fostering public trust. In order to prevent and identify public corruption, one of the responsibilities of the public sector auditor is to act as an organization regulating how public sector organizations behave, particularly with relation to public funds.
It has been demonstrated that auditing is a crucial component of fighting corruption in the public sector, and auditors and the audit profession, in general, plays a vital role in lowering fraud and corruption.3 4 This also supports the idea that improved public sector auditing appears to have a substantial impact on lowering overall corruption levels in a country5 Governments should create effective auditing systems that can be utilized for checks and balances as well as for fraud detection. Such systems should aid government auditors in spotting corrupt practices and preventing major potential economic deficits.6
Conducting performance audits can help to lessen corruption by acting as deterrents to such behaviour. Thus, performance audits can be a unique and effective tool for preventing corruption. However, it is important to keep in mind that while auditors can identify potential areas for corruption, they may be unable to assist in its detection because corrupt individuals frequently hide any evidence of their actions in official records.7 8
Methods of Preventing Corruption
In 2023, the government of Canada completed a review and analysis of select approaches and methods to prevent corruption.9 The review describes methods commonly used to prevent corruption both within Canada and globally and provides a comprehensive summary of methods commonly used to prevent corruption in both the private and public sectors. The review also provides insight on which preventative methods have empirical value and demonstrated effectiveness.
The review concludes with a summary of the evidence in terms of the effectiveness of the anti-corruption method that could be employed by an organization. At the top of the list were: tone at the top, ethics and anti-corruption training programs, a robust audit function, merit-based recruitment, and E-government. This paper will discuss each of these methods in terms of their merits as potential subjects for performance audits to assess an organization’s efforts to prevent corruption.
About the Author
John Affleck
A Principal in the Office of the Auditor General of Canada from 2001 until his retirement in 2017, Mr. Affleck was responsible for 28 federal entities, two thematic portfolios (Oversight, and Science and Technology) and he was the Internal Specialist in the Office responsible for Internal Audit. Highlights while working as a Principal for the Office included leading performance audits on abandoned mines in the North, Canada’s Economic Action Plan, the Canadian food recall process and the inspection of nuclear powerplants.
Mr. Affleck received Master of Arts (Public Administration) and Bachelor of Science (Honours, Geology) degrees from Carleton University. He also holds a Diploma in Adult Education from St. Francis Xavier University and is a graduate of Canada’s Advanced Leadership Program, Canada School of Public Service.
Contact the author at:
1 Transparency International (2024). What is corruption? https://www.transparency.org/en/what-is-corruption
2 UNODC (2022), What is corruption and why should we care?, https://www.unodc.org/e4j/en/anti-corruption/module-1/key-issues/corruption---baseline-definition.html
3 Otalor, J. I., & Eiya, O. (2013). Combating corruption in Nigeria: The role of the public sector auditor. Research Journal of Finance and Accounting, 4(4)
4 Khan, M. A. (2006, September). The role of Audit in the Fight against Corruption. Being a paper prepared for Ad Hoc group meeting of ethics, integrity, and accountability in the public sector: Re-building Public Trust in Government through the Implementation of the UN Convention against Corruption, St. Petersburg, Russia
5 Dipietro, W. R. (2011). The corruption and the quality of auditing standards. Asian Economic and Financial Review, 1(3), 120-123.
6 Ionescu, L. (2014). The role of government auditing in curbing corruption. Economics, Management, and Financial Markets, 9(3), 122-128.
7 Khan, M. A. (2006, September). The role of Audit in the Fight against Corruption. Being a paper prepared for Ad Hoc group meeting of ethics, integrity, and accountability in the public sector: Re-building Public Trust in Government through the Implementation of the UN Convention against Corruption, St. Petersburg, Russia
8 Otalor, J. I., & Eiya, O. (2013). Combating corruption in Nigeria: The role of the public sector auditor. Research Journal of Finance and Accounting
9 Sauve, Bradley, Jessica Woodley, Natalie J. Jones, et Seena Akhtar (2023) Methods of Preventing Corruption: A Review and Analysis of Select Approaches, Report number: 2023-R010. https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/2023-r010/index-en.aspx
LinkedIn
Twitter