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TINZ Board Member
Chartered Accountants Australia and New Zealand’s recent survey into New Zealand business’ experience of corruption is comprehensive and a good starting point for understanding the pervasive nature of corruption and its effects on NZ businesses – and its serious results.
Among a lot of valuable lessons from this study, two important points may be drawn:
The low level of New Zealand businesses adopting formal anti-bribery/corruption policies and processes indicates an easy-going attitude to these possibilities. Within this unethical and fraudulent practices can only prosper, likely undetected and it is not just an organisation’s trading and brand reputation which is at risk – it can be their very ability to stay in business which is endangered by a serious internal or external attack.
It is entirely appropriate that CAANZ is the body which commissioned this survey: Their trained, principled approach to ethical administration and risk is emphasised in their qualification training and throughout their members’ professional careers. Their members (whether internal company managers, or externally contracted) should be doing more for businesses than just accurately reporting financial activity and results to the board – they should be expected to recommend on risks and the processes and structures to prevent risk, especially in financial terms. Financial risk comes no more serious than bribery and corruption. Without measures being adopted to prevent these risks – this report makes it clear they largely aren’t – the culture and expectation in a company will likely be lax and vulnerable to small and large risks; staff are just not going to react in a trained way to “suggestions” which start them down the slippery slope of bribery and corruption.
The takeaway – use internal and external accountants and other skilled individuals in an ethical culture, to actively seek out, monitor and report on risk areas in which corrupt practice could develop. Without this, the risks are high and uncontrolled.
Then don’t tell the accountant or others to stick to his/her knitting when they raise uncomfortable matters – they are your best friend.
Absence of a proper anti-corruption policy covers a wide spectrum of culture ranging from lax attitudes to preparedness in order to flout legal and regulatory requirements. Lessons which will rebound seriously against a company are easily learnt by staff who are not managed and trained to be more vigilant.
In a climate where only 51% of companies will report illegal demands, the likelihood is that the other numbers reported on in this survey for, say, suffering from fraud, are themselves under-reported – this is borne out by daily evidence in the New Zealand courts and media with widespread serious cases of hitherto undetected fraud, which will have often brought the company to its knees – fostered in a climate of lax unmonitored absence of corruption policy and process. Many more serious cases must remain undetected.
This absence of focus is risk-taking on a breath-taking scale compared to the planning, sign-off and risk-mitigation observed in most companies for their marketing plans, or product development, or asset acquisition – why the difference?
The takeaway – focus and set expectation where the risks demand.