CORRUPTION

Corruption is dishonest behavior by those in positions

of power. Those who abuse their power may be
individuals or they may belong to organizations, such as
businesses or governments.
Corruption occurs when someone in a position of power
uses their authority to influence decisions or conducts
any other dishonest or fraudulent behavior like giving or
accepting bribes or inappropriate gifts, double-dealing,
under-the-table transactions, manipulating elections,
diverting funds, laundering money, and defrauding
investors.
Commercial bribery and kickbacks
These involve employees of one company giving
payments, undue advantage or expensive gifts to
employees of another company to secure an advantage.
Examples include paying procurement staff to sway their
decision in favour of the paying company, giving an
expensive gift to a bank manager to secure a loan, and
various forms of kickbacks.
Extortion and solicitation
This occurs when an employee of a company requests a
payment, undue advantage, expensive gifts, or sexual
favours in return for conducting specific business-related
tasks or making particular decisions.
ASSET MISAPPROPRIATION is a critical concern for businesses of
all sizes. It refers to illegal activities where individuals misuse their
position to commit theft or fraud. This can involve anyone from
company directors and senior personnel to general employees, as well
as external parties like accountants, consultants, or contractors. Even
external suppliers might engage in theft, perhaps by delivering
substandard goods or services.
The Varied Forms of Asset Misappropriation in the Workplace

Asset misappropriation takes numerous forms, including, but not

limited to:
1. Skimming: Where employees steal cash before it is recorded
in the company’s accounts, a challenge because of the lack of
an audit trail.
2. Offsite Skimming: Employees working remotely may engage
in unrecorded transactions, pocketing payments.
3. Direct Theft of Money and Goods: From pocketing cash in
sales transactions to stealing physical goods, such as office
supplies or even major assets like vehicle parts.
4. Improper use of company assets: Employer improperly uses
company assets leading to wear and tear and/or maintenance
costs on the item/s.
5. Lapping: A deceptive practice where an employee covers
their theft by using funds from another source, creating a
complicated web of deceit.
6. Employment Fraud: Including the creation of ghost
employees or manipulating payroll for personal gain.
7. Shell Company Schemes: Involving fictitious suppliers in the
procurement process.
INTERNAL CONTROL OBJECTIVES
Internal control is all of the policies and procedures management uses to
achieve the following goals.

These are the mechanisms, rules, and procedures implemented by a company

to ensure the integrity of financial and accounting information, promote
accountability and prevent fraud.

 Safeguard assets of the firm

  One of the primary objectives of internal controls is to safeguard the
company's assets from misappropriation, theft, or misuse. Effective
controls establish mechanisms to track and monitor physical assets,
such as inventory and equipment, as well as intangible assets like
intellectual property and proprietary information. By implementing
separation of duties, authorizations, and access controls, internal
controls help prevent unauthorized access to assets and reduce the risk
of fraud and theft.

 Ensure accuracy and reliability of accounting records and

information
 Internal controls ensure that management has accurate, timely and
complete information, including accounting records, in order to plan,
monitor and report business operations.
 Reliable financial reporting is essential for stakeholders, including
investors, creditors, regulators, and employees, to make informed
decisions.
 Internal controls play a critical role in ensuring the accuracy and
completeness of financial information by validating transactions,
maintaining proper accounting records, and conducting periodic
reconciliations. They also help identify and rectify errors promptly,
reducing the risk of misstatements in financial statements.

 Promote efficiency of the firm’s operations

 Internal controls provide an environment in which managers and staff
can maximize the efficiency and effectiveness of their operations.
 Operational efficiency is the ability of an organization to reduce waste
in time, effort and materials as much as possible, while still producing
a high-quality service or product.
 Operational efficiency is gained through a company by cost-effectively
streamlining its base operations while eliminating redundant processes
and waste. Generally, this is done by focusing on resource utilization,
production, inventory management and distribution.

 Measure compliance with management’s prescribed policies and

procedures
 Internal controls help to ensure the business is in
compliance with the laws and regulations affecting
the operations of the business.
 Policies and procedures provide a roadmap for day-
to-day operations. They ensure compliance with
laws and regulations, give guidance for decision-
making, and streamline internal processes.
However, policies and procedures won't do your
organization any good if your employees don't
follow them.