What Accountants Can Do to Stop Corruption
CPAs may not be able to stop corruption on their own, but they should be leaders of their countries' collaborative efforts to oppose it. In particular, they should do everything they can to encourage organizational controls that expose corruption early—and stop it well before auditors have to decide whether to blow the whistle. That's the substance of a new International Federation of Accountants (IFAC) discussion paper, The Accountancy Profession and the Fight Against Corruption.
According to John Gruner, IFAC's director general, the discussion
paper is in response to a challenge by World Bank President James
Wolfensohn in his keynote address to the last World Congress of
Accountants, which was in October 1997. The paper defines corruption
broadly to include "special favors and influence" as well as
such monetary sins as bribery, fraud and illegal payments. It
acknowledges that accountants cannot be expected to tilt against
windmills if it puts their livelihoods, and in some environments, even
their lives, at risk. The full text of the discussion paper can be
downloaded from IFAC's Web site at
www.ifac.org .
To be effective in their stand against corruption and their
commitment to truth and honesty in financial reporting, accountants
must practice in an environment where the legal authorities, other
professionals and institutions, and the general public are supportive.
Accordingly, IFAC encourages its 143 member bodies to "build
collaborative relationships with legislative and regulatory
authorities, the legal profession and other groups interested in
strengthening the framework for good governance"—both corporate
and political. IFAC itself has been working with several groups to
this end: Transparency International, which is focused on the fight
against government corruption; the United Nations, especially the
United Nations Conference on Trade and Development (UNCTAD); the
International Monetary Fund (IMF); the World Bank; and the
Organization for Economic Co-operation and Development (OECD),
especially its Financial Action Task Force on Money Laundering and its
Anti-Corruption Unit. The paper also asks member bodies to advocate a
tax system that disallows deductions for corrupt payments. Gruner
notes that the OECD has recommended its members reexamine their
policies on tax deductions for bribes and that several members have
changed their tax rules as a result. Gruner considers this trend both
"a major change"and "encouraging." A progress
report can be found on the OECD's Web site at
www.oecd.org
.
In another development, the U.S. Agency for International Development has made its newsletter, Accountability/Anti-Corruption, available online in English (as well as Spanish) at www.respondanet.com .
