Corruption and fraud: any lessons for the auditor?

Abstract

The Prevention and Combating of Corrupt Activities Act, Act 12 of 2004, was instituted to curb corrupt activities. It imposes a duty on people in positions of authority to report corrupt or suspected corrupt activities and related activities. However, auditors are not listed in this Act as persons in a position of authority. This article discusses whether, despite the fact that the Prevention and Combating of Corrupt Activities Act does not place such a reporting duty on an auditor, auditors nevertheless have a duty in terms of other legislation to report any unlawful activities that they uncover in the course of their work, or which they suspect to have been committed. The article also examines whether auditors are required to consider the risk of corruption.

Public Sector Auditing and Corruption: A Literature Review

“…In the public sector auditing literature, there are studies relating auditing to corruption (Ahlenius, 2000;Atuilik, 2013;Blume & Voigt, 2011;Borge, 1999;Dipietro, 2011;Dye, 2007;Dye & Stapenhurst, 1998;Everett et al, 2007;Fan, 2012;Ferraz & Finan, 2008;Ferraz & Finan, 2011;Flint, 2005;Gherai et al, 2016;Gustavson & Sundström, 2016;Ionescu, 2014;Kassem & Higson, 2016;Kayrak, 2008;Khan, 2006;Labuschagne & Els, 2006;Liu & Lin, 2012;Melo, Pereira, & Figueiredo, 2009;Morehead, 2007;Neu, Everett, & Rahaman, 2013a;Neu, Everett, & Rahaman, 2015;Neu, Everett, Rahaman, & Martinez, 2013b;Olken, 2007;Otalor & Eiya, 2013;Othman, Aris, Mardziyah, Zainan, & Amin, 2015;Suzuki, 2004;Tara et al, 2016;Tunley, Button, Shepherd, & Blackbourn, 2017;Vanasco, 1998). Several ISSN 1946-052X 2018 studies have investigated empirically the importance of public sector auditing in fighting corruption.…”

The role of auditing in the fight against corruption

“…This may be because some authors consider fraud and corruption to be two different offenses (e.g. Labuschagne and Els, 2006).…”

The Most Effective Strategies to Curb Corruption and Improve Water Service Delivery in Zimbabwe

“…Auditing can help to curb corruption because auditors can take appropriate action if they find facts which give them areason to believe that a corrupt activity amounting to an irregularity has been committed. The possible effects of the corrupt activity will also be documentedin the audit report (Labuschagne & Els, 2006). Unfortunately, Bussell (2010) found that policy initiatives intended to reduce corruption are least likely to be implemented in countries that have high levels of corruption.…”