Combating Corruption and Fraud for Sustainable Development: Beyond Audit Procedures and Rules

Abstract

Fraud and corruption have devastating effects, especially on the poorest citizens of developing countries and have spread even to countries once considered “clean.” Public sector bribery, fraud, and other forms of corruption have become leading concerns for legislators around the globe, as the diversion of public funds undermines control of the public purse and robs public policies of resources to ensure sustainable development. This paper discusses the different theories and strategies adopted by fraudsters, identify the different methods of combating this “cancer” in developed and developing countries outside the external audit approaches, and evaluate the external audit approach. It proposes strategies that are beyond compliance to external audit procedures and rules that will empower the citizens (principal) to demand for and enforce accountability from the public officials (agents). Thus, allowing for sustainable development. It argues that for these strategies to work effectively, a change in audit emphasis and a given level of decentralization is required. The principles and strategies presented in this paper can be considered by donor agencies to countries where fraud and corruption interfere with good governance.

Keywords: corruption and fraud, accountability, audit and governance