• Wednesday, May 29, 2024
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Forensic audit and corruption mitigation

Forensic audit and corruption mitigation

There is no doubt that corruption is a menace or canker worm that has eaten deep into our system. Its devasting impact has become so worrisome and alarming too, especially in recent years within our polity, thereby depriving us both individually and collectively of our common good. This article will focus primarily on the role that “forensic audit” can effectively play in order to stem or mitigate this cankerworm known as “corruption.”

Before delving further into this critical issue, there is a need for us to holistically x-ray this terminology known as “corruption.”

Definition: The word “corruption” does not really have a universal definition, so to speak. However, we may look at it as either:

-abuse of office for personal gain;

-wrongdoing that is incompatible with norms or value systems;

-abuse of entrusted power for private or personal gain;

-combination of bribery, fraud, and other related acts; and

-it may further connote the act or process of corruption.

Aside from the above description of corruption, a better understanding of this term can also be found inside those “offences” listed or as defined by the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act of 2000 as amended, which may include but is not limited to the following:

-Offence of accepting gratification.

-Offence of fraudulent acquisition of property.

-Offence of giving and accepting gratification through an agent.

-Acceptor or giver of gratification.

-Offence of fraudulent receipt of property.

-Offence of making false statements or returns.

-Bribery of Public Officers or Officials

-Using office or position for gratification.

Above all, the offence of inflating the prices of commodities above the prevailing market price or rate, etc.

In addition to the ICPC’s description of corruption as outlined above, Asaolu (2013) provides a comprehensive summary of various forms of corruption or corruptible offenses, including embezzlement, fraud, extortion, nepotism, cronyism, and bribery (kickbacks, payoffs). These manifestations underscore the multifaceted nature of corruption and highlight the urgent need for concerted efforts to combat its pervasive influence across society.

Effects of corruption on our system:

It is worthy of note to state that the effect of corruption on our society, with emphasis on the public sector environment, can be summarised using the nymonic called PESTLE in the school of management, representing political costs, economical costs, social costs, technological costs, legal costs, and environmental costs.

Political costs:

By doing so, the issue of corruption undermines our democratic values and principles within the system.

Economic costs:

This can be looked at from the perspective of rechanneling our public resources to the wrong destination.

Social costs:

By this end, the issue of corruption reduces public confidence and trust in our governance system.

Technological costs:

Under this, the incidence of corruption can lead to wrongful investment in an unprofitable or low-yielding venture.

Legal costs:

The incidence of corruption can result in unwanted litigation suits and court cases here and there, which often may not be completed if not squashed.

Environmental costs:

Corruptible tendencies can result in unnecessary or careless exploitation of our collective natural resources, further causing degradation and eventually pollution of the ecosystem.

Application of forensic audit principles in stemming or mitigating the issue of corruption in our system:

To start with, we may need to understand what a forensic auditing is. Vividly, “forensic audit” can be defined as the application of specialised skill, knowledge, technique, and expertise in the area of auditing, which may be geared towards the gathering of relevant audit evidence that will further be analysed and reported in a prescribed format that becomes admissible in a court of law for purposes of dispute resolution. The emphasis is on resolving a dispute, especially between the warring parties.

In our present-day world, where every individual or person sees wealth aggrandisement or illegal property acquisition as the order of the day, there is a need for us all to look inwardly on how to mitigate the incidence of corruption, and in which case, the forensic audit exercise appears to be way out of this mess that we have found ourselves entangled with for ages now.

The forensic audit exercise at the end of it all will assist us in the following dimensions:

(1) Firstly, ascertaining the actual nature of the wrongful act that occurred, that is, whether it is an incidence of fraud, money laundering, or corruption, as the case may be.

(2) Secondly, it will assist us in establishing the exact or concrete amount that was stolen, embezzled, or misappropriated.

(3) Thirdly, it will establish the party or parties that were involved in the wrongful act. Often times, in a fraudulent incidence or corruption case, there is no doubt there may be an established ground of collusion, thus resulting from conival between two or more parties.

(4) This approach will go a long way in establishing the motive or reason behind the commission of the wrongful act, as stated under point 1 above.

(5) The forensic audit exercise will assist the auditor in documenting all the infractions that were noticed based on the established control procedures put in place by the government or management.

(6) Above all, suggested recommendations or possible countermeasures that may be targeted at mitigating or stemming.

The incidence of corruption within our system will also accompany the forensic audit report.

I will conclude by commending previous and past governments, along with their functionaries, that have toed the line of forensic audit in combating the incidence of corruption. I strongly believe that those who are yet to do so or imbibe the forensic audit exercise in stemming corruption should not look back. Honestly speaking, its attendant benefits far outweigh the problems and intrigues occasioned by the long legal battle within our court process.

In addition to the full embracement of forensic audit principles by all the tiers of government across boards alongside their ministries, departments, and agencies (MDAs), I wish to add that the following measures captured below can also be adopted as a compliment to the much talked-about forensic audit exercise, and they include the following:

-The enactment of anti-bribery and corruption laws like the ICPC Act is already in our own case.

-The issue of promoting ethical values across levels, adopting and encouraging the act of whistleblowing both within and around our government quarters.

-The promotion of a strong judicial reform system within our system There should be a high level of promotion of proper record-keeping and bookkeeping by all and sundry.

-There should also be a widespread public education campaign across the board that is geared towards discouraging the incidence of corruption within our system.

-The promotion of an effective internal control system should be highly adopted and encouraged across all tiers of our government.

-Regular public awareness of the dangers inherent in corruption or corruptible acts should be encouraged too, promotion of an effective risk assessment process.

-Supporting a fair reward for job performance amongst our government quarters.

-Instituting a purposeful leadership mechanism across the board will also serve as an antidote in eradicating the incidence of corruption within our polity.

-The government and her functionaries should, as a matter of urgency, promote the principles of accountability and transparency across the board.

Above all, there should be a collective promotion of sanctions and punitive measures against all defaulters, indicted individuals, or government officials in order to serve as a deterrent to others who may wish to toe that line, etc.

We must all join hands to win the war against corruption in whatever capacity we find ourselves, starting from our homes, clubs, professional associations, religious inclinations, up to the government quarters, as that is the only way we can, in truth, reap the dividends of good governance.

Written by Sir Kingsley Ndubueze Ayozie MSc (Finance) Lagos, MBA, KJW, FCTI, FCA.