№ 11/2015

Fìnansi Ukr. 2015 (11): 97–112

ACCOUNTING AND AUDIT

BARYNINA Maryna ¹

¹Ministry of Defense of Ukraine
OrcID ID : https://orcid.org/0000-0002-8820-3173

The role of internal audit in prevention and reduction of corruption

The article describes the main tasks, powers and role of the internal audit units of public sector bodies in the prevention and reduction of corruption. There were identified: the main types of financial violations and shortcomings revealed by internal auditors, the State Financial Inspection of Ukraine, the Accounting Chamber and law enforcement agencies, and areas in which the most prevalent is the adoption of inefficient managerial decisions. There were analyzed groups of key reasons for violations and ineffective public resources management, and their impact on the performance of public sector bodies. There were determined causal relationships, which may indicate the presence of corruption in revealed violations. There were proposed to separate the areas which should be researched by internal auditors, from the areas which should be investigated by law enforcement agencies, and were identified the areas that are common for the experts of internal audit units and law enforcement agencies. The role of internal audit as a “third line of defence” in preventing and reducing the corruption was researched. For internal audit units of public sector bodies there were proposed the measures to prevent, reduce and detect corruption at the stages of: planning, conducting internal audits and reporting on the results. There were given the signs (“red flags”) which might be identified and which must be evaluated by internal auditors on the subject of risks of corruption. The transfer of internal audit reports to the law enforcement, and the possibility of conducting the special types of audits, particularly forensic and anticorruption audits, were considered. Various types of reports on risks of corruption and the options of audit recommendations were proposed. Also in the article it was recommended to develop a strategy of internal audit development on 5-10 year period which should include measures for building integrity and righteousness.

Keywords:internal audit, corruption, corruptions risks, public sector

JEL: D73, H83, M42

Barynina M. . The role of internal audit in prevention and reduction of corruption / M. Barynina // Фінанси України. - 2015. - № 11. - C. 97-112.

Article original in English (pp. 97 - 112)

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