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In the Shadow of the Arab Spring

23/09/2012


Companies operating in industries with international activities are the focus of much attention from regulators. As many Canadian companies develop business relations in growing markets such as North Africa, the Middle East, India, Bangladesh and China, Internal Auditors should be on high alert. In some of these regimes, corruption is a part of doing business. It is expected and embedded in daily life. As a result, companies have to manage risks and take preventive measures to ensure they stay out of the headlines.

WHAT INTERNAL AUDITORS NEED TO KNOW TO PROTECT THEIR COMPANIES AND THEIR REPUTATION

The enforcement of North American and UK anti-corruption laws on companies doing business in developing countries is increasing and will continue to do so as those laws change and become stricter.

These include:

The Corruption of Foreign Public Officials Act (CFPOA)
The Foreign Corrupt Practices Act (FCPA)
The UK Bribery Act

Internal auditors must know and be mindful of: the differences between each of the anti-corruption legislations (Canada/US/UK); the notion of corrupt intent; books and records and internal control provisions; jurisdiction principles; successor liability in the context of mergers and acquisitions; sanctions and penalties; potential civil action and criminal charges.

ARE YOU READY FOR A COMPLIANCE ENGAGEMENT OR SPECIAL INVESTIGATION MISSION?

Internal auditors who are asked by the audit committee or the board to perform a compliance engagement or a special investigation mission are expected to provide answers to the following questions, both in terms of on-going operations and activities by recently acquired corporate entities:

  1. Do we have a clearly articulated and communicated policy?
  2. Do we have a compliance officer with knowledge of and experience with anti-corruption issues?
  3. Do we provide enough training and ask for annual certification of our employees?
  4. Is our internal system of controls strong enough to detect irregularities?
  5. Are our books and records accurate?
  6. Do we have a reporting system and hotline in place?
  7. Have we implemented standards on business relationships?
  8. Do we perform independent audits to ensure compliance with these standards?
  9. Do our agreements with foreign agents and partners include a right-to-audit clause?
  10. Do we consistently apply disciplinary measures when violations are detected?
  11. How did it happen and could it happen again?

HOW MNP CAN HELP

Within the global economy, the risk associated with corrupt practices has never been greater. However, the business opportunities offered by growing international markets are lucrative, so the objective shifts to preventing and protecting your company when doing business in those locations. MNP has a national team of enterprise risk management and forensic professionals who will help you to effectively manage your risk exposure while you pursue opportunities in foreign markets.

Denis Hamel,CPA, CA, CA•IFA, CIRP, CFE, is a Regional Investigative & Forensics Services Leader with MNP. To find out what MNP can do for you, contact Denis or your local MNP representative.