Transparency International

This Anti-Corruption Helpdesk brief was produced in response to a query from one of Transparency International’s national chapters. The Anti-Corruption Helpdesk is operated by Transparency International and funded by the European Union

Query

What is the relationship between corruption and the support of audit controls? How can auditing controls serve as a tool to cover-up fraud and corruption? What are good practices in using auditing to fight against corruption?

Content

  1. The role of accountants in the fight against corruption
  2. The role of the auditing profession in facilitating corruption
  3. Recommendations for the auditing profession
  4. References

Summary

There is broad consensus in the literature on the importance of sound auditing and accounting to fight corruption, and a general expectation that accountants have a key role to play in detecting, preventing and deterring corruption. The role of accountants in covering fraud and corruption is less documented in the literature beyond anecdotal evidence of auditors being instrumental in falsifying records and misrepresenting financial statements to disguise their clients’ illicit activities. The auditing profession is particularly vulnerable to such corruption challenges due to the nature of the relationship that auditors maintain with their clients, which can lead to conflicts of interest and undermine their independence and impartiality in auditing their clients’ accounts. The recent Luxembourg leaks and Panama papers scandals have also revealed the dubious role that accountants can play in facilitating money laundering and tax evasion schemes through the use of offshore financial centres.Measures to address these challenges and enable the auditing profession to play its role in the fight against corruption include clarifying the mandate of auditors to detect corruption and money laundering, providing adequate anti-corruption training to accountants, strengthening the oversight of the profession, and promoting transparency and citizens’ participation in auditing activities.

Authors

Marie Chêne, Transparency International, tihelpdesk@transparency.org

Date

06/06/2017

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