Corruption Prevention Network - Discussion Groups

Note to Members

The Corruption Prevention Network (CPN) is a network of individuals who are willing to learn from one another, and to share knowledge in fraud and corruption prevention areas.

CPN’s primary objective is to educate subscribers through:

  • the lunch time seminars;
  • the monthly discussion groups; and
  • the annual forum.

Lunch time seminars are very popular and well attended.

The hour-long discussion groups provide an opportunity to raise awareness of issues associated with corruption prevention e.g whistle blowing, workplace culture and cyber security ethics. They are an excellent forum to share strategies in addressing these issues. Each panel is restricted up to (to a maximum of) twelve participants to ensure effective contribution. Discussions are structured around scenarios.

One of the scenarios was about Bill an audit manager in a department with limited resources. He is asked by his boss how he is determining the amount of resources for prevention and in detection of fraud, and how he is prioritising the use of these resources?

·            What should Bill be considering when allocating resources to prevention or detection?

1.    Findings/Recommendations of previous audit reports

2.    Risk register, Complaints register, conflict of interest disclosure register, gift register, flow charts of high business processes such as those relating to procurement or outsourcing.

3.    Ethics and corruption control -related policies & procedures & internal reporting processes– when last    reviewed for currency

          4. Look at trends even in low risk areas eg sick leave

          5. How frequently is the whistleblower hotline (if there is one) being used and were the reports investigated?

·            How should he determine what types of detection and prevention mechanisms will be used?

1.    Guided by above, look at segregation of duties (SOD) – are the controls appropriate, sufficient, monitored to highlight deficiencies

2.    Training effectiveness & frequency

3.    Audit of input controls (routinely, how often checked) – valid, complete & accurate – intentional manipulation of financial records

4.    How long employees remain in jobs, do they take annual leave, staff profile

5.    Tendering process – is there any record of cost-benefit analysis being conducted where applicable?

·         How should he determine which sections to target with these mechanisms?

See above + past incidences history

·         How can he demonstrate the effectiveness of these mechanisms?

Review the fraud risk management program. All levels of staff should have:

1.     A basic understanding of fraud and be aware of red flags

2.     Understand role within the internal control framework (refer to ICAC Publications see below).

3.     Read and understand relevant policies, procedures, manuals

4.     Opportunity to discuss scenarios at team meetings

5.     Access to systems that allow people to share opinions, facts anonymously and safely

          6.  Conduct culture survey, interview staff to surface shadow values
Note all of the above need to be considered to understand the current situation, but they need to be compared over time to show that the adoptive mechanisms are effective.
·         How can he obtain assurance that he is actually understanding the real situation?
    Refer to ICAC publications :
“Assessing corruption control maturity (20 Feb 2023)” and “Mature corruption control: the key outcome of better practice (13 March 2023)”  to guide audit priorities

Senior managers sharing risks and mistakes re frame mistakes as learning opportunities – make them real.

Time taken for issues to surface – sometimes involve large amounts – red flags – show that controls are not working.

It should be noted, however, that even well-written policies and audit systems can fail when faced with organization-wide corruption. Complicit behaviour by keeping silent, aids and abets the main wrongdoer.

Another scenario is about Tim and his workmate Harry who recently joined the organisation. They both work in the same area of procurement in the organisation. Tim is a matter-of-fact person, whilst Harry is more sociable. Tim has noticed that Harry is very “matey” with his clients and Tim has a funny feeling that something is not right.

Tim is unsure what to do. If he asks Harry outright, it may spoil their working relationship. Alternatively, if he looks too closely at what Harry is doing, Harry may become suspicious and feel that something is wrong.

Tim finally goes to see his supervisor and tells him of his worries. The supervisor is not really interested in what Tim is saying and tells him he is worrying about nothing. This response does not surprise Tim, as he knows that the supervisor is not really interested as long as things are running okay, and will not want to rock the boat or draw attention to his section.

Interesting discussions took place around:

  • What should Tim do?
  • What should the company do?
  • Where do responsibilities lay?
  • What role does leadership & culture play?
  • What mechanism/systems/structures should be place at the company to help people in situations similar to Tim?

Key learnings were:

  • The importance of “tone at the top”
  • Situations are often “grey” because they may present ethical dilemmas.
  • Organisational sub-cultures may develop their own interpretation of the organisation’s values: these become “shadow values”
  • Encourage discussions of grey areas at team meetings to uncover shadow values and query whether these shadow values align with the organisation values.
  • The need to have robust internal channels that lie outside the usual chain of command.
  • The value in having sources of advice to deal with situations that lie outside the usual chain of command.

If you are interested in becoming part of a new group or joining an existing group depending on your interests, as a way forward we may just hold the discussion group on a specific topic so that those interested only in that topic would attend. If so, please forward to the the following details:

  • Your contact details (name, and area you are working in)
  • Your ‘interest’ topics; and
  • Whether Wed or Fridays (it will be 12:30 pm -13:30 pm), and you will be placed on the waiting list.

Note the meetings are not every week but dependent on interest, on a monthly or bimonthly basis.

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