Chapter 65

Information Systems Strategies to Reduce

Financial Corruption
Ali Abdulbaqi Ameen and Kamsuriah Ahmad
Abstract Small and large organizations use available technologies to manage business
activities and assist in decision making. Most organizations operate their business
activities effi ciently using various information systems (IS). These systems are
used to collect data and process it according to the analyst, manager, or business
owners’ needs. Among the existing systems, the organization normally used fi nancial
information systems (FISs) to accumulate and analyze fi nancial data for optimal
fi nancial planning and forecasting decisions and outcomes. FIS closely linked
with all aspects of administrative in the organizations. This system is an integral part
of business and is fundamental for stability, sustainability, and growth of an organization.
In recognition of the importance of FIS, various countries and international
organizations started to invest in such systems. This system is increasingly being
used to improve transparency in the organizations and as a result FIS can play an
important role in fi ghting corruption in public fi nance systems. This chapter aims to
investigate and to identify the existing IS strategies that are used in fi ghting fi nancial
corruption. The fi nding reveals that there are a number of IS strategies to combat
corruption but among those FISs possess the ability to contribute effectively towards
anticorruption efforts. At the end, this chapter identifi es fi ve factors of FIS that contribute
to anticorruption strategies. This study could play a signifi cant role in
explaining the complex relationship between the related factors and the quality of
FISs to facilitate the anticorruption process.
Keywords Information systems • Financial information system • Reduce fi nancial
corruption • Anticorruption strategies

Introduction
The World Bank estimated that each year between US$1 trillion and US$1.6 trillion
is lost to corruption. The lost includes tax evasion, bribes, infl ated budgets, and
illegal expenditures (Otusanya, Lauwo, & Adeyeye, 2012 ). This estimate does not
include embezzlement of public funds or theft of public assets, which are extremely
diffi cult to estimate. Corruption is a form of dishonest or unethical conduct by a
person entrusted with a position of authority, often to acquire personal benefi t.
Corruption can take many forms that vary in degree from the minor use of infl uence
to institutionalized bribery. Transparency International’s defi nition of corruption is
“the abuse of entrusted power for private gain.” This defi nition is also used in this
study. Corruption typically occurs when there is an opportunity for an exchange of
resources and services that can be kept covert. It occurs in the context of systems
that create opportunities for corrupt behavior. Therefore, when searching for the
sources of corruption it is necessary to focus not on corrupt individuals, but on corrupt
systems. Corruption brings substantial economic, social, and moral costs to the
society affected by it. Essentially, the costs caused by corruption are the reason why
the fi ght against corruption should be taken seriously. Given the problems presented
by corruption, searching for solutions is necessary. It’s important to determine the
key infl uencing factors on IS as an anticorruption strategy (ACS). The review indicates
that most studies on IS as an ACS appear to be extremely diverse and complex.
The research aims to identify the main IS strategies that exist in the literature that
were used to reduce fi nancial corruption.
Background
This chapter attempts to provide better understanding for the FISs and their role in
reducing corruption. It also focuses on exploring the relationship between IS, systems
software applications, and anticorruption strategies. In particular, it explores
(1) the relationship between the uses of IS and anticorruption strategies, and (2) the
key factors that infl uence the ability of the FIS to reduce corruption. The study used
an iterative design approach, which consists of three investigated techniques such as
conducting a literature review, content analysis, and website analysis. The fi ndings
indicate that most of the studies conducted on IS as an ACS are extremely diverse,
which indicates that FIS has been used as a mechanism to reduce corruption.
Table 65.1 describes various studies on IS strategies to reduce corruption found in
the literature from the year 2003 to 2012. The number of occurrences of research in
this area is compiled and recorded.
The table shows the most frequent IS strategies that are used as an ACS found in
the literature. The fi ndings show that most scholars have focused on utilizing
e- government, ICT applications, social media, and Web applications as tools in corruption
reduction strategies. Only a few studies have focused on the role of FIS in
reducing corruption. The table statistically highlights the most important studies

relevant
scholars and specialists. Most scholars have focused on utilizing e-government
as tools in corruption reduction strategies; however the research using FIS as an
ACS received the least, with only 14 %. Therefore the interest of this study is to
explore further the signifi cance of FIS as an anticorruption strategy.
Information Systems and Anticorruption Strategies
Numerous studies have concentrated on efforts to employ ICT component as an
important means in the corruption reduction strategies. These studies have concentrated
on using information systems to improve e-government innovations, to harness
ICT application, to adapt various Internet applications, and to use social media.
Literature has revealed that the main attempt to employ ICTs as part of ACS is to
prevent corruption electronically. In the public fi nancial sector, the information systems
play a signifi cant role in reducing revenues and expenditure corruption.
Figure 65.1 summarizes the fi ndings that show the electronic anticorruption tools
and strategies. The strategies that can be used to reduce corruption are discussed in
the next subtopic.
E-Government Strategy
A wide range of studies have been conducted that focused on the importance of
improving e-government to reduce corruption (Andersen, 2009 ; Bertot et al., 2010 ).
The success of harnessing the e-government initiative depends on the citizen education,
culture, and their acceptance of ICT technology. Governments strongly prefer
delivering services through the Internet to boost cost effi ciency. Andersen ( 2009 )
determined that e-government has a signifi cant control of corruption and exhibits a
positive and economically promising effect. E-government has received increasing
attention from the academic and particular community. This strategy comprises a
main part of e-services that involves in providing the governmental services and
processes online. Web Application Strategy
Web-based technology is another popular strategy to reduce corruption (Zhang &
Zhang, 2009 ). This technology allows the public to monitor corruption-prone activities,
such as permit applications or approvals, and to raise questions in case of
irregularities. Widespread use of centralized and high-speed countrywide networks
has signifi cantly contributed to their performance (Rodríguez, Caba Pérez, & López
Hernández, 2007 ). Web-based fi nancial services use the Internet as a communication
standard by combining a web browser, a display standard, and a web server as
an access point to back-end stand-alone systems. Numerous researchers have suggested
the blackguard stand-alone possibility of adapting an Internet application to
reduce corruption (Hui, 2008 ; Pathak, Naz, Rahman, Smith, & Agarwal, 2009 ).
Many tools have been developed to stop corruption; considerable focus has been
given lately on e-government, particularly using communication technologies, such
as the Internet and mobile phones. The intention of these tools is to open government
processes publicly and allow citizens to access information (Zhang & Zhang,
2009 ). Internet can also probably act as a corruption suppressor because of its positive
effect on spreading information about offi cial misconduct, which inevitably
increases detection of corrupt behaviors of politicians and public servants, and,
thus, reduces them (Andersen, Bentzen, Dalgaard, & Selaya, 2011 ).
Social Media Strategy
Social media can refer as an enabling technology and the contents they generated
through three kinds of instruments, namely social networking sites such as Facebook,
micro blogging services like Twitter, and multimedia sharing services such as Flicker and YouTube. Social media is
utilized as an anticorruption instrument to
create attitudes and culture of transparency and establishes new avenues for openness.
Bertot et al. (2010) reviewed literatures and found evidence for the potential
of using social media to reduce corruption . Using social media is a central part of
transparency and more recent anticorruption initiatives. It has transformed the manner
in which people are able to interact with one another and the means in which
governments can promote transparency and reduce corruption (Bertot et al., 2010).
It has promoted transparency by empowering citizens to monitor the activities of the
governments collectively (Arpit, 2012 ). This strategy has enabled users to access
content easily and to interact with others via highly accessible Web-based technologies.
Citizen participation, collaboration, empowerment, and time exploiting are the
main potential strengths to reduce corruption. It facilitates citizen journalism, which
improves transparency and enables users to interact with other parties to socialize,
share information, or achieve a common goal or interest.
Mobile Technology Strategy
Using mobile technology as part of ACS is among the recent approach in corruption
reduction (Bhuiyan, 2011 ; Hellstrom, 2010 ). At present, mobile technology has a
signifi cant role in our lives. Substantial growth in adopting these technologies,
including nations with low landline and Internet penetration, has been observed.
Mobile technology can have a signifi cant role in promoting good governance,
increasing accountability, and reducing corruption. In most countries, mobile technology
adoption is high and has considerably outpaced computer and Internet adoptions
(Bertot, Jaeger & Grimes, 2010). This technology can be effectively deployed
to disseminate news on corrupt practices. In fact, some mobile technologies, such as
iPhone, are completely accessible to people with visual impairments because of the
presence of a touch screen and the absence of a tactile keyboard. Mobilizing users
and the community to report corruption cases will make it easier to impose corrective
actions on involved individuals as well as to organize systems to avoid a corrupt
attitude (Ameen & Ahmad, 2014 ). Thus, supporting the emerging nature of e-government
and mobile government that holds considerable promise for deploying
transparency initiatives is vital.
Using FIS in Corruption Reduction Strategies
Public fi nance can increase economic growth, and consequently helps in reducing
poverty. However, corruption reduces revenues and increases illegal public expenditure.
Based on the literature analysis, only a few studies have focused on the role of
FIS in reducing corruption. That means more research on this strategy is needed. Most
countries have focused on using ICT in their activities to strengthen the reformation
process as the necessary ingredient to a good fi nancial governance transparency
(Ameen & Ahmad, 2014 ). ICT offers nations a modern approach to create transparency and promote anticorruption
practices. Most countries intend to introduce
FIS in fi nancial procedures, revenues, and expenditure systems (Bertot et al., 2010).
Figure 65.2 illustrates several information systems that can be used to reduce corruption
in the fi nancial sector, in both expenditures and revenues. Procurement and payroll
information systems were assisting in reducing the expenditure corruption,
whereas tax and custom information systems have the same role in reducing revenue
corruption (Ameen & Ahmad, 2014 ).
Procurement Information Systems
Procurement information systems have been established as a response to the requirement
to computerize purchases and contracts. This requirement arises from the lack
of standards, which makes it diffi cult to determine the extent of corruption effect in
terms of expenditures, particularly for public goods. However, the public and private
sectors have different practices with regard to procurement and contract specifi
cations. Researchers frequently rely on untrustworthy accounts because of lack of
detailed information on behavioral responses. Without computerized information
systems, such situations do not facilitate the construction of an analytical framework
to explain corruption and develop ways to control it (Chand & Moene, 1999 ).
Nevertheless, using decision support systems in public procurements limits the possible
damaging effects of corruption (Csáki & Gelléri, 2005 ). In many nations, the
public procurement information system is one kind of FIS that has been regarded as
a successful solution to corruption problems. Literature has clarifi ed several examples
from different countries such as the Czech Republic, Malaysia, the Philippines,
and Russia (Andersen, 2009 ).
Tax and Information System Strategy
Tax information systems are not involved in the actual delivery of services such as
fi ling a tax or renewing a license. This situation has a huge effect in terms of transparency
and anticorruption (Bhatnagar, 2003 ). These systems play an important role in preventing corruption by improving
transparency, which enables extensive crosschecking
of information. It provides an opportunity to utilize a computerized selection
of taxpayers for auditing and monitoring practices, and enabling a timely
response to taxpayers who are requesting information and assistance.
Computerization, as a corruption reduction strategy, dramatically enhances the effi -
ciency of most functions in tax administration by providing tamper-proof and paperfree
information based on the identity of potential taxpayers, third-party information,
accounts, and transactions. The tax information system facilitates cross-matching
among various sources of information, which helps verifi es returns fi led and provides
accuracy in tax collection and recovery operations. Tax computerization
assists in selecting audits and enhances taxpayer information and assistance
(Vishwanath & Kaufmann, 1999 ). According to Seongcheol, Hyun Jeong, and
Heejin ( 2009 ), tax information systems assist in preventing corruption in some
countries, such as Korea, Mexico, and the Philippines. These FISs provide administrative
services to many civil affairs committees and reduce contact between tax
collectors and taxpayers, and consequently reduce opportunities for corruption
(Andersen, 2009 ). The successful implementation of information systems in tax
administration has yielded impressive results (Hui, 2008 ).
Customs Information System
As illustrated in Fig. 65.2 , customs information system is one of the most important
means to reduce corruption, and customs automation is one of the major cost elements
of investment toward customs improvements (Milner, Morrissey, & Zgovu,
2008 ). ICTs can improve the effi ciency of customs authority through public fi nancial
processes by reducing corruption opportunities. Recently, the ASYCUDA,
which was developed by UNCTAD, is used by over 70 developing countries to
manage tariff collection and reduce border-line corruption. The system accelerates
the movement of goods and reduces transport expenses (Wakelin & Shadrach,
2001 ). Furthermore, it helps increase government revenues by reducing corruption.
A customs information system has a signifi cant role in tariff collection and has
increased direct and transit trades (Wijayasiri & Jayaratne, 2010 ). ASYCUDA uses
international codes and standards developed by the International Organization for
Standardization, the World Customs Organization, and the United Nations. The system
can be adopted to suit the customs characteristics of any country. The system
allows electronic data interchange between traders and customs administrations,
during which data are exchanged with external systems such as banks or carriers.
The system applies the rule of electronic data interchange for administration, commerce,
and transport (Wijayasiri & Jayaratne, 2010 ). The latest edition, which is
known as ASYCUDA World, is an e-customs version that is compatible with major
database management and operating systems such as Oracle, DB2, Sybase,
Microsoft Windows, Linux, and HP-UX. Discussion
This research utilized an analysis on the existing researches to indicate the most
strategies that harness IS as an ACS. Related concepts were discussed focusing on
the information systems strategies to reduce corruption. As shown in Table 65.1 ,
among the information systems strategies used to reduce corruption, only a few studies
have focused on the ability of FIS to contribute towards these efforts. In order to
analyze the ability of FIS to reduce corruption, an analysis is conducted. FISs are
system software that accumulates and analyzes fi nancial data in order to make good
fi nancial management decisions. The use of FIS allows governments to link databases
in different departments to streamline the backend of public administration
processes. In addition, an FIS could also increase tracking of accounting events in
conjunction with IT resources and the interface through which governments interact
with citizens. This system assists in evaluating and controlling within an entity and
to assures appropriate usage and accountability for their resources. It associates in
management decision making, inventing planning, and performance management
systems and provides profi ciency in fi nancial reporting and control to facilitate
administration in the formulation and implementation of an organization’s strategy.
These fi nancial reports are prepared for non-management groups such as shareholders,
regulatory, creditor, agencies, and tax authorities. The reports could be used as
indicators for corrupt transactions. In the context of public fi nance, several factors
indicate that FIS could reduce corruption by promoting good governance, strengthening
reform-oriented initiatives, reducing potential for corrupt behavior, enhancing
relationships between government employees and citizens, allowing for citizen
tracking of activities, and monitoring and controlling the behavior of government
employees. By producing such reports, FIS can bring more transparency, auditing,
and controlling into public fi nancial administration. Thus, FIS can become one of the
key components of an ACS. There are fi ve factors that can contribute when using FIS
as an anticorruption strategy. These factors are system quality, information quality
and service quality of the system, FIS characteristics, and anticorruption factors. FIS
must be quality systems, which means that the information system processing which
includes the software and data components must be technically sound. The output of
the information system which can be in the form of reports or online screens should
produce quality information. FIS must be able to provide quality service to other
authorities and have the ability to monitor, control, and track transactions. These factors
have signifi cant effect on FIS as an anticorruption strategy.
Conclusion and Future Work
FISs play signifi cant role in fi nancial management, which are the important parts of
huge institutional management. Therefore FISs have the potential to become a signifi
cant key component of a broader anticorruption strategy. The chapter reviews
various strategies on exploiting ICTs to reduce corruption. These strategies include

media. Therefore in order to reduce corruption effectively, FISs should be used in

the fi elds of procurement, tax, customs, and the debt management. This study also
discusses some important factors in the fi eld of information system and anticorruption
that contribute in reducing corruption. As a future research, the study plans to
investigate the role of individual FISs in reducing corruption. In the fi nancial reform
strategy which is constructed by revolutionary changes in science and technology,
the employment of FISs in the strategy will facilitate transparency in the public
fi nancial administration process.
Acknowledgment The authors would like to thank the Faculty of Information Science and
Technology, Universiti Kebangsaan Malaysia, for giving the authors an opportunity to conduct this
research. This research is funded by Universiti Kebangsaan Malaysia under Exploratory Research
Grant Scheme FRGS/1/2014/ICT07/UKM/02/3 and DPP-2015-019.