Can the public sector deliver a zero tolerance approach to corruption risk?

Transcription

1 Can the public sector deliver a zero tolerance approach to corruption risk? Australian Public Sector Anti-Corruption Conference November 2017

2 Disclaimer The presentation and accompanying slide pack are provided solely for the benefit of APSAC delegates and are not to be copied, quoted, or referred to in whole or in part without KPMG s prior written consent. KPMG accepts no responsibility to anyone for the information contained in this presentation. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions contained in the presentation are those of the author and do not necessarily represent the views and opinions of KPMG, an Australian partnership, part of the KPMG International network. The author disclaims all liability to any person or entity in respect to any consequences of anything done, or omitted to be done. 2

3 Zero tolerance in practice 3

4 Challenges & opportunities for the public sector Value of sensitive and personal holdings $$$$$$ Digital agenda Mandated focus on prevention Heightened media and public scrutiny Funding Perception Reporting obligations Resources Source: Research paper by Dr Katarina Fritzon of Bond University 4

5 Tone from the top

6 Tone from the top QUESTIONS FOR SENIOR MANAGEMENT TO ASK THEMSELVES 1 HAVE WE CLEARLY ARTICULATED OUR OBJECTIVES WHEN TAKING A ZERO TOLERANCE STANCE? 2 HOW DO WE DEMONSTRATE OUR COMMITMENT TO ZERO TOLERANCE? 3 HAVE WE DEFINED WHAT SUCCESS LOOKS LIKE AND HOW DO WE MEASURE IT? 4 IS IT GOOD NEWS OR BAD NEWS TO RECEIVE REPORTED CONCERNS OF IMPROPER CONDUCT? 5 DOES STRICTLY ENFORCING CONSEQUENCES, IRRESPECTIVE OF CIRCUMSTANCES AID US IN ACHIEVING OUR OBJECTIVES? 6

7 Tone from the top Listed utility Listed industrial Largely domestic operations Zero tolerance stance Committed project sponsor Communication and awareness campaign High risk jurisdictions Zero tolerance stance Committee project sponsor Communication and awareness campaign Four calls in the first week Zero calls in four years 7

8 Tone from the top Accountability

9 Accountability 9

10 Accountability a framework for success 3LoD Prevention Detection Response 1 st line (Management) 2 nd line (Risk & compliance) 3 rd line (Internal audit) Establish and implement an ABC management system Demonstrate senior management commitment to ABC Provide awareness training for employees, the Board and third parties Conduct risk assessment Third party integrity due diligence Implement preventative controls Oversee bribery and corruption control activities Provide guidance, advice and recommendations for improvement to management. Maintain risk assessment methodologies and provide oversight on application Develop and promote tools to facilitate compliance monitoring Provide a central point of control expertise Implement detective controls, including the use of data analytics Establish and promote options for reporting concerns, available to both employees and third parties Develop detective controls to be adopted by operational management Monitor emerging areas of risk exposure and facilitate reporting to senior management and the business Provide assurance that bribery and corruption risk is being managed effectively Investigate all instances of suspected bribery or corruption, professionally and objectively Administer disciplinary action Remediate identified internal control deficiencies Facilitate the investigation of cases of suspected bribery or corruption Recommend improvements to the control environment Report to the Board on compliance performance and adequacy and implementation of the ABC management system 10

11 Accountability pitfalls we ve observed 1 2 Blurred responsibilities Lack of coordination Over-reliance on internal audit Accountability vacuums Poorly targeted solutions Inefficient resource allocation 3 No feedback or escalation Absence of enduring benefits Prolonged detection 11

12 Tone from the top Accountability Monitoring

13 Monitoring ticking the box ABC framework ABC Policy Strategy Awareness training Conflicts policy Gifts register Training Monitoring controls 13

14 Monitoring risk factors When is the opportunity greatest for both parties? When Who Who has the ability to act on that motivation? Why would someone be motivated to take such a risk? Why What How How could it occur and what footprint would it leave on our systems? What form would a benefit take? 14

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16 Tone from the top Accountability Monitoring Third party vetting

17 Third party vetting Striking a balance with technology They ve got form.not worth the risk They have some matters ongoing in court but nothing out of the ordinary.no adverse media footprint happy to proceed? Nil result can t get a profile on them. Not unexpected for this jurisdiction. It will be the same result for all the locals - push them through.? 17

18 Third party vetting Striking a balance with technology Baseline Enhanced Comprehensive Corporate intelligence on publicly available information Documentation provided by the subject Declarations of commitment to comply with the principal s integrity framework Deeper corporate intelligence Basic survey completed by subject to enrich data used for corporate intelligence Consideration of the subject s integrity framework Exception-oriented corporate intelligence Detailed survey focused on Assessment of the subject s integrity framework Interviews with subject senior management 18

19 Tone from the top Accountability Monitoring Third party vetting Compliance and enforcement

20 Compliance and enforcement FOUNDATIONS TO ADD VALUE BEYOND QUALITY INVESTIGATION OUTCOMES INDEPENDENCE Oversight body Conflict management TECHNOLOGY Forensic tools System controls Targeted analytics RESOURCES Capacity Structure Diversity of skills Performance COMMON AREAS FOR IMPROVEMENT Independence in appearance Remedial actions Compliance monitoring Surge capacity Complexity Case load 20

21 In summary Can the public sector deliver a zero tolerance approach to corruption risk? Yes with genuine commitment to: implementing reasonable preventative and detective measures ensuring it has access to appropriately qualified resources to investigate concerns raised; and applying firm and transparent disciplinary action, as required 21

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