3To understand how to manage risks in our businesses ObjectivesGovernance, Ethics, Risk and FraudObjectivesTo understand the concepts of corporate governance, ethics, risk and fraudTo appreciate the need for corporate governance and an ethical culture within an organisationTo understand how to manage risks in our businesses
4Definitions The Key Concepts Governance, Ethics, Risk and FraudDefinitionsThe Key ConceptsGovernance is the system of controlling and directing an entityEthics is a set of principles of right conduct or a system of moral principlesRisk is the effect of uncertainty on objectivesFraud is a deception deliberately practiced to secure an unlawful or unfair gain
6Definition What is Corporate Governance? ‘Corporate Governance is a system by which a company is directed and controlled’.– Sir Adrian Cadbury
7Corporate Governance Issues Understanding corporate governance issuesRights and equitable treatment of stakeholdersRole and responsibilities of the boardIntegrity and ethical behaviourDisclosure and transparency
8Strengthens confidence in management Corporate GovernanceCorporate GovernanceNeed for CGThe need for corporate governanceTransparencyStrengthens confidence in managementA form of protection for shareholdersGood corporate governance encouragesgrowth and sustainability for SMMEs
10King III- scope & application King III – Scope and ApplicationCorporate GovernanceKing IIIKing III- scope & applicationApplies to all entitiesApply or ExplainImpact on Board – effective leadership
11Stakeholders in an organisation Stakeholder RelationshipsCorporate GovernanceLegislative FrameworkStakeholders in an organisationConflict of interests
12Board – effective leadership Corporate GovernanceEthical Leadership & Corporate CitizenshipBoard/ Directors – Focal Point & Custodian of CGEffective & Independent Audit CommitteeGovernance of RiskKing IIIGovernance of ITCompliance with Laws, Rules, Codes & StandardsEffective Risk Based Internal AuditGoverning Stakeholder RelationshipsIntegrated Reporting & Disclosure
13Conflict of interests Financial Reporting and Auditing Corporate GovernanceFinancial Reporting and AuditingDirectors’ RemunerationBoard – Stakeholder RelationsCorporate governance & Risk ManagementCommunication framework
14Conflict of interestsCorporate Governance“What makes corporate governance necessary? Put simply, the interests of those who have effective control over a firm can differ from the interests of those who supply the firm with external finance. The problem commonly referred to as a principal- agent problem, grows out of the separation of ownership and control and of corporate outsiders and insiders. In the absence of the protections that good governance supplies, asymmetries of information and difficulties of monitoring results in capital providers who lack control over the corporation, finding it risky and costly to protect themselves from the opportunistic behaviour of managers and controlling shareholders.” (OECD)
15Approaches to corporate governance The shareholder value approachThe stakeholder/ pluralist approachThe enlightened shareholder approach
16Best approach to corporate governance In your view, which approach is the best approach to corporate governance?
17Corporate Governance Framework Source: Wikipedia
21Basic ethics concepts and distinctions Ethics is a set of principles of right conduct or a system of moral principles
22What does ‘ethics’ mean to you?? Basic ethics concepts and distinctionsEthicsWhat does ‘ethics’ mean to you??I am an ethical person/ I am not an ethical personI work for an ethical organisation/ I do not work for an ethical organisationI live in an ethical country/ I do not live in an ethical country
23Basic ethics concepts and distinctions GoodMyselfOthers
24What is business ethics? Basic ethics concepts and distinctionsEthicsWhat is business ethics?Business ethics can be defined as the principles, norms and standards that guide an organisation’s conduct of its activities, internal relations and interactions with external stakeholders
25What are values? Personal Values Basic ethics concepts and distinctionsEthicsWhat are values?Personal ValuesPersonal values are your own convictions as a person about what is good, acceptable and desirable. Your values are your core values as an individual
26Personal Values Basic ethics concepts and distinctions Assuming that you enter into a retail shop to buy a few groceries for the week. You pay for the items at the till, and you leave the retail shop. However, as you are about to enter into your car at the parking lot, you checked the change the till attendant gave you, and you realise you have been given thirty rand (R30) more than you are entitled to. What will you do?
27Values in Organisations Basic ethics concepts and distinctionsEthicsValues in OrganisationsStrategic valuesWork valuesEthical values
28What is the difference between ethics and law? Basic ethics concepts and distinctionsEthicsEthics & LawWhat is the difference between ethics and law?
29Personal & Organisational Ethics Basic ethics concepts and distinctionsEthicsPersonal & Organisational EthicsThe good applevsThe bad apple
30Personal & Organisational Values Basic ethics concepts and distinctionsEthicsPersonal & Organisational ValuesChild labour may sometimes be justifiedIf you could save a life by telling a lie, you should do soPeople who kill others for a cell phone should forfeit their moral right to lifeSmoking is not good
31Basic ethics concepts and distinctions ProfessionalEthicsA profession is a typical example of a group of people who adhere to a set of ethical standards.A virtue is a trait that intuitively enables one to do what is right. Professional virtues are those character traits which members of a profession are expected to have , for example, virtues of an auditor are independence, integrity and objectivityProfessionalVirtues
32Ethics is the cornerstone of corporate governance Importance of Ethics to the OrganisationEthicsImportanceImportance of EthicsEthics is the cornerstone of corporate governanceEthics ensures the sustainability of a businessGood corporate reputation is built on a solid foundation of ethical culture
33Importance of Ethics to the Organisation A culture of trust must be built on a corporate framework of ethical principles which are transparency/ openness, competence, integrity and benevolenceEthics play a major role in the prevention of fraud. Fraud prevention becomes a shared responsibility among the members of the organisation
34Ethics – Driver for Corporate Governance Ethics & Corporate GovernanceEthicsEthics – Driver for Corporate GovernanceFairnessAccountabilityTransparencyResponsibility
35Ethics & Corporate Governance Ethics of GovernanceInclusiveApproachExclusiveApproach
36It enhances economic performance It helps build an ethical culture Ethics & Corporate GovernanceEthicsCode of Ethics - BenefitsIt enhances economic performanceIt helps build an ethical cultureStakeholders know where they stand (the contents of the code set clear parameters of desirable or undesirable behaviour)
37It provides security and predictability for employees Ethics & Corporate GovernanceEthicsCode of Ethics - BenefitsIt provides security and predictability for employeesIt can contribute to building the organisation’s reputationIt creates customer and stakeholder loyaltyIt builds trust between you and your stakeholders (the “others)
38Ethics & Corporate Governance Code of Ethics – Six Key ElementsPurposeProcessFormatContentToneImplementation
39Ethics & Corporate Governance Ethics as a Corporate CulturePerformance ManagementCommunicationRecruitmentEthical Corporate CultureSelectionInduction & TrainingDisciplinary Procedures
40Ethics & Corporate Governance Ethical Decision Making ProcessWhat alternatives are available for my consideration?Are the alternatives legal?Do the alternatives meet with professional/ organisational ethical standards?Will I be able to disclose my actions?
41Ethics & Corporate Governance Ethical Decision Making ToolWhat alternatives are available for my consideration?If Yes Are they legal? If No , Stop!Do they meet with professional/ organisational ethical standards?If Yes If No, Stop!Will I be able to disclose my actions?If Yes If No, Stop!Ethical Decision
42Ethics & Corporate Governance Case StudiesCase 1At a function organised by your company in your company premises, shortly before the end of the function, you notice that your manager is busying putting cartons of drinks into the boot of his car. In that split of a second; he glances at you, smiles and says; ‘what the company doesn’t know wouldn’t hurt the company; erase this from your memory’. Then your supervisor says his goodbyes to everyone including you, and he drives out of the premises.What do you do?
43Ethics & Corporate Governance Case StudiesCase 2A supplier overhears a conversation amongst your colleagues that today is your birthday; she quickly goes out to the shopping mall next to your office building to buy you a card and a box of chocolate. She comes back to your office, meets you at the reception, and wishes you ‘a happy birthday’ and gives you the birthday card and the box of chocolate.What do you do?
44Ethics & Corporate Governance Case StudiesCase 3A supplier overhears a conversation amongst your colleagues that today is your birthday; she quickly goes out to the shopping mall next to your office building to buy you a card and a box of chocolate. She comes back to your office, meets you at the reception, and wishes you ‘a happy birthday’ and gives you the birthday card and the box of chocolate. The supplier is one of the three bidders your department is considering for a current tender.What do you do?
45Ethics & Corporate Governance Case StudiesCase 4One of the accountants in your department has resigned and needs to be replaced. Your manager tells you that he wants to appoint Tyler, an accountant with one of your suppliers. He tells you to nevertheless go through the motions of following procedure by advertising the post internally. You agree that Tyler has the requisite qualification for the post. Once the applications have all been received, you realize that several more competent candidates from your subsidiary companies have applied. Your manager is however adamant that Tyler should be appointed.What do you do?
46Ethics & Corporate Governance Case StudiesCase 5You get a call from a recruitment company requesting a reference for a person who is your acquaintance. This person was introduced to you a week ago by a mutual friend. You cannot claim to know her so well. What do you tell the caller?
48Agenda Introduction to Risk 2. The Risk Management Process 3. King III and the Risk Management Process4. Information Technology (IT) Risk5. Compliance Risk
49Definition of Risk Management Introduction to RiskRiskRisk and Risk ManagementDefinition of Risk The effect of uncertainty on objectives - ISO 31000Definition of Risk ManagementThe process of Identifying, Analysing and Ranking the importance of the identified Risks with a view to Avoiding, Eliminating, Accepting or Reducing the Business’s exposure to Risk that could negatively affect the Start-up, the Management or the Growth of a Business.
50Definition of Risk and Risk Management So, Risk Management is something new that we need to learn about Well ….. No! It’s something we do every day without even thinking about it
51So let’s look at an everyday example of Risk Management Definition of Risk and Risk ManagementRiskSo let’s look at an everyday example of Risk ManagementThe Objective The Risk The ControlsTo go out of the house but still stay Dry and Warm.Getting cold or raining wet.Putting on a long sleeve shirt, long pants, socks & shoes and taking a waterproof jacket with us.
52Risk Management Process The effect of uncertainty on objectivesVISIONWhich states where we wish the business to goMISSIONStates what we want the Business to achieve at a Macro LevelBUSINESS PROCESSDefine the Business Processes that will be needed to achieve this Vision and MissionOBJECTIVESWhat do we wish to achieve with each Business ProcessWhat can prevent us from achieving the ObjectivesRISKS
53Risk Universe Business Processes 5 Risk Categories Social & Ethics RiskFinancial RiskOperational RiskInformation Technology RiskCompliance to Laws and Regulations Risk16 Business Areas65 Business Processes (Excluding the Business Specific Processes)347 Risks
54Risk Universe Social & Ethics Financial (Risk And Control Framework) Retirement FundsB.B.B.E.E.SupplierSkills DevelopmentBusiness ContinuityPlanningCompetitorEquity EmploymentEconomy / SocialCode of EthicsShareholderSocialResponsibilityDerivativesUnder PerformingAssetsStrategic PlanningBusiness PartnerRegulatory & ComplianceEnvironmentalimpactForeign ExchangeCash Management/ TreasuryFinancialAccountingFunding / DebtReputationCustomerOccupationalHazardsIntangible AssetsInterest RateCredit Exposure & CollectabilityEquityBoard of DirectorsGovernment/ CountrySustainability& Risk ReportingInformation / DataCommodityTax08 - Capital Structure & Investments01 -Governance02- Stakeholder03 - S.H.E. andSustainability04 - IntellectualProperty05 - Market Exposure06 - Liquidity & Credit07 - Financial ReportingSocial & EthicsFinancialRisk Universe(Risk And Control Framework)16 - Compliance to LawsAnd RegulationsOperationsInformationTechnology09 - Accounting10 - Assets11 - Legal & Insurance12 - Human Resources13 - CommercialBusinessSpecific14 - IT Environment15 - IT OperationsManagement AccountingStock Control and LogisticsLegal LiabilityRecruitment and RetentionMarketingIT EnvironmentModellingIT SystemsSupportCreditorsFixed Assets and PlantContractsPayrollSalesInformationTechnology StrategyIT SystemsOperationsDebtorsProperty & EstateInsurancePension Fund & Medical AidPurchasing & ProcurementInformationSecurityMonitoringFleet Control & WorkshopsLeaveArea 17 ProductionProcessService DeliveryContinuousAvailabilityIndustrial RelationsSystemDevelopmentLife CyclePerformanceManagementTermination ofServiceHuman Capital Management
55The Risk Management Process Business Process SelectionHowever, not all of these BUSINESS PROCESSES will be applicable to your business – so you will need to select the ones that apply to you.If your Business does not sell on credit – you can eliminate the Debtors Business ProcessIf your Business only buys for cash – you can eliminate the Creditors Business Process
56Risk AnalysisRiskThe process of analysing and ranking the importance of the identified RisksIdentify the Business Processes that are applicable to your Business;define the Objectives of each of these Business Processes;identify the Risks that could prevent you from achieving these Objectives; thenAnalyse the Risk and Rank these according to:The Likelihood that the risk would occur, andThe Impact that this would have if it does occur
59Non-Financial Impact Description Risk ImpactRiskLevelNon-Financial Impact DescriptionQuantitativeReputationSystems Availability5. SevereThe impact is beyond the Stakeholders’ ability to manage or resource and as such may threaten the survival of, for example, a particular project or the company itself.> R10 MSuspension of business.Systems unavailable for more than 2 days4. MajorThe impact would threaten the ability to achieve the Product and/or Organisational objectives in the medium term.R2 M – R10 MAdverse media comment that has a long term impact on Company’s image, significant brand damage.Systems unavailable for more than 5 hours less than 2 days3. SignificantThe impact may threaten the ability to achieve the Product and/or Organisational objectives in the short term.R500K – R2 MAdverse media comment or regulatory action or fine that has a short term reputational impact, requiring corrective action and dedicated additional resources to rectify and recover.Systems unavailable for more than 30 minutes but less than 5 hoursMinorThe impact can be absorbed within the day-to-day business running costs.R50K – R500KAdverse impact on some external customers, minor impact on objectives.Systems unavailable for more than 5 minutes but less than 30 minutesInsignificantThe impact has little or no effect on the day to day running costs of the business< R50KBreakdown in control but process performance unaffected.Systems unavailable for less than 5 minutes
60Probability of Occurrence in the next 12 Months Risk LikelihoodRiskLevelDescriptionProbability of Occurrence in the next 12 Months5. Almost CertainExpected to occur in most circumstances or occurs regularly>70%4. LikelyOccurrence is noticeable, starting to be of nuisance value40% - 70%3. PossibleOccurs occasionally20%-40%2. UnlikelyOccurs infrequently5% - 20%1. RareOnly occurs in exceptional circumstances<5%
61REDUCE THE BUSINESS’S EXPOSURE TO RISK Risk MitigationRiskAvoiding, Eliminating, Accepting or Reducing the Business’s exposure to RiskAVOIDING RISKTo avoid risk, a business would need to transfer the risk to another party e.g. Insuring against the RiskELIMINATING RISKTo eliminate risk, a business would need to exit from the business that is causing the risk – e.g. Manufacturing Risk - stop Manufacturing and buy in the item requiredACCEPT THE RISKA business may decide to accept the risk where the impact of the risk is less than the cost of controlling the RiskREDUCE THE BUSINESS’S EXPOSURE TO RISKIntroduce Control
62Introduction of Control RiskControl: Controls are the actions taken to prevent an event from occurring or reduces the impact of the risk event.The Introduction of Control leads to two concepts of RiskInherent Risk: (Pre-Control) A subjective measure of the threat of a Risk based on its Inherent Likelihood and Inherent Impact measures, without considering the effectiveness of controls, even if they exist. This produces a score that indicates the worst-case exposure in the event that there are no controls in place, or the controls fail to take effect during a risk event.Residual Risk: (Post Control) A subjective measure of the threat of a Risk based on its Residual Likelihood and Residual Impact measures, giving the remaining level of risk after risk treatment measures have been taken. Residual Risk can only be claimed if the controls are in place and work to reduce the risks and/or consequences to the level that is expected.
63Risk AssessmentRiskThe first task of the Risk Manager in performing a risk assessment would be to determine who the effective players are in each business process to be assessed.The second step would be to determine the most effective mechanism to conduct the assessment. Two examples of these are:Risk Management Workshops – All participants in one room to discuss and determine Risk Ratings.Risk Management Questionnaires – completed by all participants, collated and summarised to form the final assessment – discussion only on contentious points where risk rating vary greatly.Automated tools are available to assist with either of these assessment mechanisms
65King III and the Risk Management Process King III requires the segregation of Internal Audit and Risk Management FunctionsChapter 7INTERNAL AUDITChapter 4RISK MANAGEMENT7.1 Effective Risk Based Internal Audit4.1 Board is Responsiblefor Risk7.2 Implement a Risk BasedAudit Plan4.2 Set Levels of Tolerance4.3 Assisted by Risk Committee7.3 Assessment of Systems of Internal Control and Risk4.4 Management must Design & ImplementRisk Plan7.4 Audit Committee to Oversee Internal Audit4.5 Perform Risk Assessment7.5 Internal Audit Strategically Positioned4.6 Implement a Framework4.7 Respond Appropriately4.8 Monitor Risk Continuously4.9 Provided Assurance on Effectiveness of the Risk Process4.10 Adequate Risk Disclosure to Stakeholders
66The Board’s Responsibilities RiskKing III defines 10 Principles for Risk Management in Chapter 4 – The Governance of Risk1) The Board should be responsible for the Governance of Risk2) The Board should determine the levels of Risk Tolerance3) The Risk Committee or Audit Committee should assist the Board in carrying out its Risk Responsibilities.
67The Board’s Responsibilities - Contd RiskThe Board should delegate to management the responsibility to Design, Implement and Monitor the Risk Management Plan.The Board should ensure that Risk Assessments are performed on a continual basis.The Board should ensure that Frameworks and Methodologies are implemented to increase the probability of anticipating unpredictable risks.The Board should ensure that management considers and implements appropriate Risk Responses.
68The Board’s Responsibilities - Contd RiskThus Management must:Design, Implement and Monitor the Risk Management Plan.Ensure that Risk Assessments are performed on a continual basis.Implement Frameworks and Methodologies to increase the probability of anticipating unpredictable risks.Consider and Implement appropriate Risk Responses.Monitor Risk on a continual basis.
69The Board’s Responsibilities - Contd RiskThe Board should ensure continual risk monitoring by ManagementTo facilitate the Board’s responsibility of Oversight, Management must provide feedback to the Board, in the form of:Risk Assessments,Risk Registers,Risk Mitigation Actions Plans,Monitoring & Corrective Action Reports.
70The Role of Internal Audit The Board’s Responsibilities - ContdRiskThe Board should receive assurance regarding the effectiveness of the Risk Management Process.The Role of Internal AuditKing III requires companies to establish an internal audit function which provides assurance over the company’s governance, risk management and internal controls. Internal audit will be required to provide a written assessment of the system of internal controls and risk management to the board, as well as a written assessment of the internal financial controls to the audit committee.
71The Board’s Responsibilities - Contd RiskThe Board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.Principle 10 covers the Relationship with Stakeholders and the Integrated Reporting to Stakeholders. The King III report details these two topics in Chapter 8 – Governing Stakeholder Relationships, and in Chapter 9 – Integrated Reporting and Disclosure.
72King III defines 7 Principles for IT Governance in Chapter 5 – Information Technology RiskRiskKing III defines 7 Principles for IT Governance in Chapter 5 –The Governance of Information TechnologyThe Governance of ITThe Impact of Information Technology of RiskIT as an Integral part of the Company’s Risk Management Process
73The Governance of ITRiskPrinciple 1 - The Board should be responsible for Information Technology (IT) Governance.Principle 2 - IT should be aligned with the performance and sustainability objectives of the company.Principle 3 - The Board should delegate to management the responsibility for the implementation of an IT Governance Framework.Principle 4 - The Board should monitor and evaluate significant IT Investments and Expenditure.
74IT as an Integral part of the Company’s Risk Management Process Principle 5 - IT should form an Integral part of the Company’s Risk Management.IT Risk should form part of the Company’s Risk Management Activities and Considerations.IT Management need to ensure that they can demonstrate adequate business resilience.IT Legal Risk arises from the possession, ownership and operational use of Technology.Companies must comply with applicable IT laws, rules, codes and standards.The Board must consider how IT could be used to aid the Company in the Management of Risk.
75IT RiskRiskPrinciple 6 - The Board should ensure that Information Assets are managed effectively.The protection of Information (Information Security)The management of Information (Information Management); andThe protection of personal information processed by companies (Information Privacy)Principle 7 - A Risk Committee and Audit Committee should assist the Board in carrying out its IT responsibilities.
77How Compliance impacts on Ethics, Governance, Risk and Fraud Compliance RiskRiskKing III defines 4 Principles for Compliance in Chapter 6 – Compliance with Laws, Rules, Codes and Standards.How Compliance impacts on Ethics, Governance, Risk and Fraud
78Board ResponsibilityRiskThe Board should ensure that the Company complies with all applicable laws and considers adherence to non-binding rules, codes and standards.The Board and each individual Director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business.Compliance Risk should form an integral part of the Company’s Risk Management Process.The Board should delegate to Management the implementation of an effective Compliance Framework and Process.
80Agenda What is Fraud 2. Faces of Fraud or Corruption 3. Reducing Fraud Risk4. Detection of Fraud and Awareness Programme
81“Fraud and deceit abound now more than ever before”. Fraud RiskFraud“Fraud and deceit abound now more than ever before”.SIR EDWARD CODE (1602)
82There is no single accepted definition of fraud. What is FraudFraudDefinition of FraudThere is no single accepted definition of fraud.It is impossible to provide a comprehensive definition of fraud. However, all definitions have one thing in common - an element of dishonesty or deceit.Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g., in Science, to gain prestige rather than immediate monetary gain.
83Fraud is a crime, and also a civil law violation. What is FraudFraudElements of FraudFraud is a crime, and also a civil law violation.Knowingly making a false representation;Something intended to deceive; deliberate trickery intended to gain an advantage;An intentional perversion of truth; deceitful practice or device resorted to with intent to deprive another of property or other right;The intentional and successful employment of cunning, deception, collusion; or artifice used to cheat or deceive another person whereby that person acts upon it to the loss of his property and to his legal injury;
84Unfair advantage by unlawful or unfair means; What is FraudFraudElements of Fraud (contd)Unfair advantage by unlawful or unfair means;Intentional deception resulting in injury to another person;The act of leading a person to believe something which you know to be false in a situation where you know the person will rely on that thing to their detriment;A deception, intended to wrongfully obtain money or property from the reliance of another on the deceptive statements or acts, believing them to be true;The intentional perversion of the truth in order to mislead someone into parting with something of value;
85For a fraud to occur there are 3 elements required, these are: What is FraudFraudElements of Fraud (contd)For a fraud to occur there are 3 elements required, these are:Need – The first element is a need, whether actual (Spouse is retrenched) or perceived (just have to have that new Boat)Justification – Entitlement, this is owed to me because……Opportunity – the perpetrator has to have access to the Cash, Asset, persons to be used or whatever is to be used / removed
86Definition of FraudFraudFor purposes of this presentation, we will use the following definition.Fraud is the intentional deception to cause a person to give up property or some lawful right or to damage another individual using deceit, trickery or cheating.
87Corruption is the abuse of entrusted power for private gain Definition of CorruptionFraudCorruption is the abuse of entrusted power for private gainIt hurts everyone who depends on the integrity of people in a position of authority
88Prevention and Combating of Corrupt Activities Act, Act No. 12 of 2004 Fraud(CHAPTER 2 - OFFENCES IN RESPECT OF CORRUPT ACTIVITIES)(Part I: General offence of corruption)Any person who directly or indirectly -accepts or agrees or offers to accept any gratification from any other person,whether for the benefit of himself or herself or for the benefit of another person: orgives or agrees or offers to give to any other person any gratification, whether forthe benefit of that other person or for the benefit of another person,in order to act personally or by influencing another person so to act in a manner -that amounts to the-(aa) illegal, dishonest, unauthorised, incomplete, or biased: or(bb) misuse or selling of information or material acquired in the course of theexercise, carrying out or performance of any powers, duties or functionsarising out of a constitutional, statutory, contractual or any other legal obligation:(ii) that amounts to -(aa) the abuse of a position of authority:(bb) a breach of trust; or(cc) the violation of a legal duty or a set of rules:(iii) designed to achieve an unjustified result: orthat amounts to any other unauthorised or improper inducement to do or not to doanything.is guilty of the offence of corruption
89What's Good for the Goose is Good for the Gander Key Drivers in the Current Economic ClimateFraudOne of the Key Drivers for Fraud and Corruption is :PEER INFLUENCE.If the Politicians and Government not only in South Africa, but around the world are open to Corruption, then why not me?What's Good for the Goose is Good for the Gander
90Transparency International Key Drivers in the Current Economic Climate (Contd)FraudTransparency International--- The global coalition against Corruption ---The Corruption Perceptions Index ranks countries / territories based on how corrupt a country’s public sector is perceived to be.It is a composite index, drawing on corruption-related data from experts and business surveys carried out by a variety of independent and reputable institutions.ScoresScores range from 0 (highly corrupt) to 10 (very clean).
91Corruption Perception Index (2011) FraudSOUTH AFRICAPopulation (2010):50 million* GDP (2010):$363.7 billion* Infant mortality rate(per 1,000 live births ):40.7* Life expectancy (2009)51.61 years* Literacy rate (2007)88.7%Corruption Perception Index (2011)Ranking64 / 183Score4.1 / 100 (Highly Corrupt) to 10 (Very Clean)
92Corruption Perception Index (2011) Corruption Perception Index (2011) - contdFraudUNITED KINGDOM* Population (2010):62.2 million* GDP (2010):$2.25 trillion* Infant mortality rate(per 1,000 live births ):4.6* Life expectancy (2009)80.05 yearsCorruption Perception Index (2011)Ranking16 / 183Score7.8 / 100 (Highly Corrupt) to 10 (Very Clean)Stats from World BankOne of the Three Giants
93UNITED STATES OF AMERICA Corruption Perception Index (2011) Corruption Perception Index (2011) - contdFraudUNITED STATES OF AMERICA* Population (2010):309.1 million* GDP (2010):$14.59 trillion* Infant mortality rate(per 1,000 live births ):6.5* Life expectancy (2009)78.09 yearsCorruption Perception Index (2011)Ranking24 / 183Score7.1 / 100 (Highly Corrupt) to 10 (Very Clean)One of the Three Giants
94Corruption Perception Index (2011) Corruption Perception Index (2011) - contdFraudAUSTRALIA* Population (2010):22.3 million* GDP (2009):$ billion* Infant mortality rate(per 1,000 live births ):4.1* Life expectancy (2009)81.54 yearsCorruption Perception Index (2011) Ranking8 / 183Score8.8 / 100 (Highly Corrupt) to 10 (Very Clean)One of the Three Giants
95Corruption Perception Index (2011) Corruption Perception Index (2011) - ContdFraudBRAZIL* Population (2010):194.9 million* GDP (2010):$2.09 trillion* Infant mortality rate (per 1,000 live births ):17.3* Life expectancy (2009)72.76 years* Literacy rate (2008)90%Corruption Perception Index (2011)Ranking73 / 183Score3.8 / 100 (Highly Corrupt) to 10 (Very Clean)One of Our Trading Partners
96Corruption Perception Index (2011) Corruption Perception Index (2011) - ContdFraudNIGERIA* Population (2010):158.4 million* GDP (2010):$ billion* Infant mortality rate(per 1,000 live births ):88.4* Life expectancy (2009)50.95 years* Literacy rate (2009)60.8%Corruption Perception Index (2011)Ranking143 / 183Score2.4 / 100 (Highly Corrupt) to 10 (Very Clean)One of Our Trading Partners
97Corruption Perception Index (2011) Corruption Perception Index (2011) - ContdFraudCHINA* Population (2010):1.3 billion* GDP (2010):$5.93 trillion* Infant mortality rate(per 1,000 live births ):15.8* Life expectancy (2009)73.06 years* Literacy rate (2009)94%Corruption Perception Index (2011)Ranking75 / 183Score3.6 / 100 (Highly Corrupt) to 10 (Very Clean)One of Our Trading Partners
98Corruption Perception Index (2011) Our Closest Neighbours Corruption Perception Index (2011) - ContdFraudNAMIBIA* Population (2010):2.3 million* GDP (2010):$12.17 billion* Infant mortality rate (per 1,000 live births ):29.3* Life expectancy (2009)61.62 years* Literacy rate (2009)88.5%Corruption Perception Index (2011)Ranking57 / 183Score4.4 / 100 (Highly Corrupt) to 10 (Very Clean)Our Closest Neighbours
99Corruption Perception Index (2011) Our Closest Neighbours Corruption Perception Index (2011) - ContdFraudBOTSWANA* Population (2010):2 million* GDP (2010):$14.86 billion* Infant mortality rate (per 1,000 live births ):36.1* Life expectancy (2009)53.01 years* Literacy rate (2009)84.1%Corruption Perception Index (2011)Ranking32 / 183Score6.1 / 100 (Highly Corrupt) to 10 (Very Clean)Our Closest Neighbours
100Corruption Perception Index (2011) Our Closest Neighbours Corruption Perception Index (2011) - ContdFraudZIMBABWE* Population (2010):12.6 million* GDP (2010):$7.47 billion* Infant mortality rate (per 1,000 live births ):50.9* Life expectancy (2009)48.45 years* Literacy rate (2009)91.9%Corruption Perception Index (2011)Ranking154 / 183Score2.2 / 100 (Highly Corrupt) to 10 (Very Clean)Our Closest Neighbours
101Corruption Perception Index (2011) Our Closest Neighbours Corruption Perception Index (2011) - ContdFraudMOZAMBIQUE* Population (2010):23.4 million* GDP (2010):$9.59 billion* Infant mortality rate (per 1,000 live births ):92.2* Life expectancy (2009)49.28 years* Literacy rate (2009)55.1%Corruption Perception Index (2011)Ranking120 / 183Score2.7 / 100 (Highly Corrupt) to 10 (Very Clean)Our Closest Neighbours
102Faces of Fraud and Corruption From amongst the many Faces of Fraud, we have chosen to focus on the following four:Asset MisappropriationFinancial MisstatementComputer CrimeIdentity Theft
103Techniques to monitor or detect Asset Misappropriation: Tips and TechniquesFraudTechniques to monitor or detect Asset Misappropriation:Customer returns, credits or write-offsUnallocated payment / Suspense accountsInventory scrap, spoilage, obsolescenceInventory shrinkageFixed asset write-offs
104Techniques to Prevent Asset Misappropriation: Tips and TechniquesFraudTechniques to Prevent Asset Misappropriation:Employee monitoring via CCTV or Management-by-walk-aboutSegregation of dutiesExamination and countersigning of documentationExamination of cancelled chequesIndependent verificationSurprise auditsJob rotationPhysical security
105Understanding your Risk of Fraud Hardening your Controls against Fraud Reducing Fraud RiskFraudUnderstanding your Risk of FraudHardening your Controls against Fraud
106Embedding Fraud Awareness in the Workplace Detection of Fraud and Awareness ProgrammeFraudEmbedding Fraud Awareness in the WorkplaceWhistle Blowing – Methods and Protection