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describe the regulatory environment in which forensic accountants operate

- - - - The most important output contemplated in the fraud risk assessment process set out in AS 8001– 2008 is the ‘treatment program’ for identified risks.
        
        Such treatment programs may involve:
        • Risk avoidance (discontinuing the activity giving rise to the risk or transferring the risk associated with that activity to another party, e.g. the risks surrounding banking cash, which can be transferred to another party by arranging a cash collection service).
        • Improved internal control in relation to the business activity giving rise to the risk or the risk itself.
        • Improved detection program (to ensure that the risk, if it does occur, is identified as quickly as possible.
        • Risk retention with no treatment program on the basis that it is a relative low-level risk that would have a relatively low impact on the organisation if it did occur (AS 8001–2008 Fraud and Corruption Control, s. 3.6).
  - - - • a program for corruption resistance wherein the entity makes a strong anti-corruption statement (in terms of both incoming and outgoing corrupt conduct) which is properly communicated and then consistently applied throughout the entity;
        • implementing a policy of personnel rotation so that improper relationships are less likely to develop;
        • consideration of requiring ‘vendor audits’ of ‘high-risk’ providers;
        • enhanced probity and contracting procedures;
        • opening channels of communication within the entity so that employees have a range of alternative avenues for reporting concerns in relation to possible corrupt conduct; and
        • opening channels of communication with customers, vendors and other third parties aimed at encouraging those parties to come forward if there is an indication of corrupt conduct involving the entity or any person associated with the entity (AS 8001–2008).
    - - • developing business principles for anti-bribery within the organisation;
        • developing a program for countering bribery;
        • risk assessment;
        • establishing the scope of the anti-bribery program; and
        • establishing program implementation requirements
- - - - • An organisation could be liable if a senior person in it commits a bribery offence
        • Due their position within the organisation (i.e. seniority) the person’s activities would automatically be attributed to the organisation
        • An organisation could also be liable when someone who performs services for it (e.g. an employee or agent) pays a bribe to gain or retain business.
      - • Organisation could have a full defence for the actions of employees or agents (except senior management) if it can show it had ‘adequate procedures’ in place to prevent bribery
        •
        
        It follows from a reading of the provisions of Section 7 that corporations need to be more ‘proactive’ than ‘reactive’ in their anti-bribery response if they are a ‘relevant commercial organisation’, in effect, if they do business in the United Kingdom. If they fail to take proactive steps aimed at implementing ‘adequate procedures designed to prevent persons associated with it from undertaking such conduct’ they may be criminally liable for the conduct of their people who are involved in bribing foreign officials. An overview of those steps is set out later in this module
      - Guidelines for the prevention of bribery under the UK Bribery Act
        
        PTRDCM
        
        Principle 1 – Proportionate procedures
        Principle 2 – Top-level commitment
        Principle 3 – Risk assessment
        Principle 4 – Due diligence
        Principle 5 – Communications (including training)
        Principle 6 – Monitoring and review
  - - - Australia does not have a Foreign Corrupt Practices Act (like the United States does); instead, the Criminal Code Act was amended by the proclamation of Criminal Code Amendment (Bribery Of Foreign Public Officials) Act 1999 (Cwlth). This amendment Act is known informally as the Bribery of Foreign Public Officials Act. It criminalises bribery payments that are made to a public official where the aim is to illegitimately acquire some business advantage
      - The Australian Government has been criticised by the OECD for its lack of enforcement of anti bribery laws. According to a 2011 survey of 88 company executives undertaken by Baker & McKenzie LLP, 64 per cent felt that Australian laws were not adequately enforced (Schneider 2011).
  - - - • It is unlawful for US persons or entities to make payments to foreign officials to assist in obtaining or retaining business
        • Includes improper payments made by foreign subsidiaries of US companies, joint venture partners, or third party agents working for US companies
        • Companies are required to maintain accurate books and records and to have sufficient internal controls to provide reasonable assurance that transactions are executed and accounted for with management’s authorisation
      - The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to:
        (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation; and
        (b) devise and maintain an adequate system of internal accounting controls (U.S. Department of Justice 2015).
      - Table 3.8: Guidelines for compliance with the FCPA
  - - - Previously, the US FCPA permitted so-called ‘facilitation payments’, as does the Australian legislation. A ‘facilitation payment’ is defined in the criminal code as a payment that is of nominal value, paid for the sole or predominant purpose of expediting a minor routine action that is documented by the payer of the facilitation payment.
        
        The facilitation payment provisions have now been reversed in the United States so that, consistent with the UK legislation, facilitation payments as well as bribes are banned.
        
        Australian legislation still permits facilitation payments.
  - - - Legislative mechanisms include both ‘hard law’ (binding legislative requirements) and ‘soft law’ (non-legislative pronouncements intended as guidance to for-profit organisations and governments).
      - It is clear that corporations and other organisations operating globally need to take a proactive approach to foreign bribery for two reasons.
        Firstly, they need to ensure that their corporate reputation is not tarnished by the negative publicity associated with discovery of foreign bribery and,
        secondly, they need to ensure that they can demonstrate that they have implemented systems and controls that are likely to be effective in preventing bribery in order to provide an effective defence against charges that the organisation itself committed an offence through to conduct of one or more of its personnel.