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It’s just over a decade now since the World Bank Group President openly declared corruption as “public enemy number one” in developing countries. The UNODC went even further, proclaiming it “the single greatest obstacle to economic and social development around the world”. Around the same time, I wrote an article for the Ethical Boardroom Magazine titled ‘Why Anti-Corruption Programmes Fail’ in which I listed eight issues boards and managers needed to be aware of when establishing corruption prevention programmes. One of these was the importance of providing fraud and corruption prevention awareness training to staff. A decade on from this – and despite its importance – the Association of Certified Fraud Examiner’s (‘ACFE’) 2024 global study on occupational fraud has found that NGOs continue to have the lowest implementation rate of awareness training of all 13 sectors studied.
While there are a number of reasons for this, let’s look at some sobering statistics highlighted by the study. The first, and arguably the most important, is that the median loss suffered by NGOs from fraud and corruption was US$85,000. The second is that annual external audits continue to be the primary anti-corruption control for NGOs. While playing an important role in deterrence, external audits only detect around 3% of frauds that take place. In comparison, around 5% are detected by accident, meaning that NGOs have almost 2 times more chance of uncovering fraud by mistake, than by it being detected by their external auditors.
When it comes to actually detecting corruption, almost half (43%) of all instances of fraud and corruption are detected by tip offs. With more than three times as many cases as the next most common method, tip-offs continue to be the most effective corruption control.
So how do the findings raised above relate to fraud and corruption awareness training? A vital part of a comprehensive corruption prevention programme, providing awareness training at all levels of an organisation can dramatically reduce fraud and corruption losses and improve detection time. This is demonstrated by the following ACFE findings:
When overlaying this with the fact that authorities now fine NGOs nearly two and a third more than public companies in relation to instances of fraud and corruption, it highlights the importance of fraud and anti-corruption training as a key safeguarding process. Not only does it help ensure that funding and other resources entrusted into an NGOs care are spent on the purpose intended, but if an integrity breach does take place, it ensures faster detection and lower losses being incurred.
Corruption prevention awareness training not only equips staff with the skills to ensure that the NGO complies with its regulatory requirements (both internal and external), but helps create a culture of integrity. By ensuring that it “walks the talk”, is the single greatest asset an NGO has in building and maintaining its reputation with donors and the public alike.
Investing even a modest amount in corruption prevention training for staff, can minimize – and even avoid fraud losses – by helping to prevent and/or detect an integrity breach early on. It will also help prevent an NGO from having to expend significant resources on having to not only manage an integrity breach, but to repair any reputational damage caused. Last, but not least, in knowing what constitutes fraud and corruption, staff can: better understand how to act; be more comfortable about when to report, or call out instances that they may have witnessed; and be more assured in the steps that the organisation will take to ensure that workplace violations are properly addressed. In other words, why pay for something that could potentially have been avoided in the first place?
So what should fraud and corruption prevention awareness training cover? While there is no single common approach used, in my experience – to be effective – it participants must be able to:
Just as importantly, to ensure its effectiveness, the training should be specifically tailored to the development context. The effectiveness of generic (or “out of the box”) training will have minimal impact, it’s geared to an environment diametrically opposed to that faced by NGOs.
With significant experience and expertise in the NGO and international development sectors, Integritas360 has designed and developed two online self-paced fraud and corruption prevention courses for NGOs:
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