Tone at the Top

The tone at the top principle emphasizes the importance of having strong anti-corruption values at the top of an organization (i.e., senior level management) as the views and actions of leaders and executives are key in influencing the motivations and actions of employees. Essentially, organizational culture starts at the top; therefore, if senior level management strongly denounces corruption, so too will lower-level employees.¹⁰

In order to prevent corruption, organizations need to create a corporate culture that fosters integrity and ethical behaviour. A key contributing factor to creating such a culture / environment is through a strong tone from the top.¹¹

Has senior management created a culture of anti-corruption? How has it communicated its commitment to the organization’s personnel and to the public? What have been management’s actions and messages?¹²

Auditing tone from the top can prove to be challenging but is not beyond the scope of performance audit possibilities. For example, benchmarking against other organizations the number and nature of known incidents of wrongdoing may highlight the extent to which management’s tone at the top has led to compliance with the entity’s policies. If management dismisses minor violations as unimportant, it may indicate a culture of noncompliance that could heighten the risk of more serious violations.¹³

Other possibilities for examining the tone at the top through the lens of a performance audit include examining the use of anonymity in incident reports (whistle blowing), assessing social media reputation, reviewing the results of employee surveys, examining the tone of management communications, conducting field visits to different parts of the entity’s operations, examining the records of exit interviews, conducting interviews with staff, and organizing focus groups.¹⁴

Ethics and Anti-Corruption Training Programs

Training programs related to corruption generally have two purposes. The first objective is related to ethics and anti-corruption training and is intended to provide trainees with a deeper understanding of the intricacies of corruption and afford them the necessary education and abilities to recognize it. The second objective is to provide trainees with hands-on skills on how to address corruption should they be confronted with it.¹⁵

Many prominent anti-corruption organizations view ethics training and anti-corruption training as a common best practice. Employees should be trained on their company’s code of conduct, conflicts of interest, company policies and they should also receive anti-corruption training specific to their role (especially those in high-risk areas such as procurement). Notably, the United Nations Convention Against Corruption places significant emphasis on the importance of training programs as methods of prevention.^{16 17}

The first step is assessing an organization’s efforts to provide ethics and anti-corruption training is to determine if such training even exists? Key questions that could be explored as part of a performance audit include: Why are you offering this training, and what do you need it to do for you, your learners, and your organization in order for your organization to meet it organizational objectives?¹⁸ A performance audit could also examine such things as the training materials, the training schedule (e.g. frequency), the budget, and any evaluations / assessments of the effectiveness of the training in terms of achieving its intended outcomes.

The Internal Audit Function

A number of anti-corruption bodies such as the OECD and Transparency International have emphasized the importance of having proper auditing functions. An external performance audit could audit the strength of an organization’s internal audit function.

In 2004 and again in 2011, the Office of the Auditor General of Canda (OAG) conducted performance audits of the internal audit function in the Canadian government which provides insights for this paper as to what exactly could possibly be examined. These performance audits looked at four aspects of an internal audit activity including the reporting relationships, the risk-based plans, the reporting practices, and the completion of an independent external quality assessment review.¹⁹

It is important that the reporting relationships, support the independence of internal audit. Independence is key to internal audit’s effectiveness. Whether annual internal audit plans focus on key risks is another important aspect. Has internal audit developed a risk-based audit plan for the internal audit activity?

The results of the internal audit activities completed needs to be reported clearly. The Institute of Internal Auditors’ International Professional Practices Framework²⁰, that are followed by the Government of Canada²¹, for example, indicate that an internal audit report can contain the engagement conclusions, themes such as effective practices or root causes and conclusions at the level of the business unit or organization The report is also to include the criteria, the scope a summary of the information supporting the conclusions and disclosure of reliance on the work of other assurance providers, if any.

¹⁰ Lambsdorff, G. (2015). Preventing corruption by promoting trust - insights from behavioural science. Passauer Diskussionspapiere - Volkswirtschaftliche Reihe, 69(15).

¹¹ Transparency International. (2022). Global anti-bribery guidance https://www.antibriberyguidance.org/

¹² Canadian Audit and accountability Foundation (2013). Practice Guide to Auditing Efficiency
   https://www.caaf-fcar.ca/en/efficiency-concepts-and-context/management-activities-that-can-foster-efficiency/commitment-and-tone-from-the-top

¹³ The Wall Street Journal, 10 Ways to Measure the Tone at the Top, https://deloitte.wsj.com/cfo/10-ways-to-measure-the-tone-at-the-top-01671379182

¹⁴ The Wall Street Journal, 10 Ways to Measure the Tone at the Top, https://deloitte.wsj.com/cfo/10-ways-to-measure-the-tone-at-the-top-01671379182

¹⁵ U4 Anti-Corruption Centre, Inform your work with U4’s quality research and practical guidance, U4 Anti-Corruption Resource Centre

¹⁶ UNODC United Nations Against Corruption, https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf

¹⁷ 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

¹⁸ Neovation, How to audit your training, How to audit your training program with our tips and techniques (neovation.com)

¹⁹ OAG (2011). Chapter 3 – 2011 – Internal Audit, https://publications.gc.ca/collections/collection_2011/bvg-oag/FA1-10-2011-3-eng.pdf

²⁰ The Institute of Internal Auditors, Global Internal Audit Standards, p. 80 https://www.theiia.org/globalassets/site/standards/editable-versions/globalinternalauditstandards_2024january9_editable.pdf

²¹ Government of Canada, Policy on Internal Audit, https://www.tbs-sct.canada.ca/pol/doc-eng.aspx?id=16484