By Rajat Vig and Saurabh Khosla
The G20 Anti-Corruption Working Group (ACWG) has been an active work stream since its establishment in 2010. Anti-corruption-related initiatives have been part of the last four annual leaders’ declarations. The “G20 high-level principles on enhancing the role of auditing in tackling corruption” was first of the five documents released by the Anti-Corruption Working Group in Bali. The principles introduced in the document are consistent with the broader anti-corruption action plan of bringing topics such as book and record maintenance, financial statement disclosures, accounting, auditing, and corresponding remediations to the fore.
The document emphasises on the role of audit institutions in not only preventing and combatting corruption, but also promoting integrity, accountability, and transparency. It recommends a harmonious interpretation of the six principles introduced and suggests that G20 countries apply these in accordance with domestic legal systems to complement existing anti-corruption commitments. The six principles are as follows:
* Support the role of auditing bodies in contributing towards preventing and countering corruption.
* Strengthen the role and capacity of audit institutions and public-sector internal auditors to identify, prevent, and counter corruption in accordance with their mandates.
* Develop robust national frameworks to promote the follow-up of the audit findings related to corruption.
* Strengthen efforts to build and enhance cooperation amongst audit institutions, internal audit functions, anti-corruption agencies, law enforcement, and other relevant institutions in countering corruption.
* Promote the use of information and communication technologies to support auditing in countering corruption.
* Encourage private-sector audit professionals to identify and report corruption.
Each country will need to customize the above principles based on its relative context and current status. However, one key point to note is that the document promotes the difference and diversity in the mandates, roles, and division of work of audit institutes across geographies. The responsibility of conducting anti-corruption-related audits should not rest on a single set of professionals, especially, if they are not tasked/trained to identify or investigate such matters.
With India assuming G20 Presidency, we have the opportunity to bring in new dimensions to the overall ecosystem to tackle corruption. Preventing use of cryptocurrency for exchanging illicit funds could be one such agenda. Another proposal on the agenda could be the standardisation and/or digitisation of license and permit processes at the municipal or similar corresponding levels across countries.
India can also highlight its experience of introducing digital payments as an effective means of eliminating leakage and corruption in terms of enabling policies, institutions, technology and processes. Initiatives such as the Jan Dhan Yojana, Aadhaar and mobile enabled transfers (JAM) culminating with Direct Benefit Transfer to recipients have had a huge and positive impact in tackling corruption at the grassroot level. Scaling up of digital payments has been recognised as a great leveler, with transactions ranging from payments to a temporary roadside shop to restaurants at five-star hotels.
Other key proposals that may be deliberated and considered for implementation and/or scale up by businesses and organisations include the following:
1. Implementation of ISO 37001 (anti-bribery management system): ISO 37001 has been in existence for around six years; however, there are only a handful of public and private-sector entities that have obtained this certification. The anti-bribery and anti-corruption agenda will find a new lease of life if government/private-sector entities, in a phased manner, start to prefer ISO 37001 certified entities for tender allocation.
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2. Continuous monitoring: While Indian Corporates have started setting up in-house teams to ensure compliance with anti-corruption-related requirements, they often tend to be irregular with monitoring exercises. Such teams could periodically review and monitor transactions on a sample basis. Periodic testing may include reviewing payments to high-risk third-party intermediaries (TPIs), cash payments, and reimbursements to key employees dealing with the Government. It is important that such internal teams are appropriately skilled and structured to ensure independence in their routine work. They should be able to work without a fear of vindictiveness, considering the sensitivities around their roles and responsibilities.
3. Anti-corruption commitments and right to audit: Corporates should consider adding specific anti-corruption- commitments to their Governance agenda with periodic reporting to the Audit Committee or Board of Directors. Some of the anti-corruption related parameters that could be considered are a confirmation on having a mandatory anti-corruption policy, status of compliance with the policy, trainings for relevant stakeholders, and adequate penalty provisions.
4. Training and awareness: Not many are aware that paying bribes too is a crime under the Prevention of Corruption Act, 2018. Organisations need to appropriate the right budgets for training on sensitive matters, such as anti-corruption at beginning of the year, to ensure no compromises with quality. This could be considered to be rolled out in a staggered way wherein, in the initial stages, organisations above a specific size and scale should conduct mandatory anti-corruption awareness sessions for their employees and high-risk Third-Party Intermediaries (TPIs) (i.e., similar to the practices followed for compliance with requirements of Foreign Corrupt Practices Act, 1976 (US) or the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 in India)
In depth deliberations and mutual agreement between the G-20 countries on some of the above issues is likely to go a long way in strengthening the international anti-corruption agenda.
Rajat Vig – Partner, Financial Advisory, Deloitte Touche Tohmatsu India LLP and Saurabh Khosla – Partner, Financial Advisory, Deloitte Touche Tohmatsu India LLP
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