January 24, 2018

IS 15900: 2010 Indian Standard on Fraud and Corruption Control

Every citizen of India is aware of risks and consequences of fraud and corruption in Indian organizations including Governments at state and central level.  Reports by various audit and accounts institutions and committees have all highlighted the impact that fraud and corruption can have on the productivity, image and efficiency of an organization and on all aspects of organizational administration and governance. Bribery and corruption of all kinds undermines trust, inhibits social and economic development and undermines fair competition.

There are several reasons why the elimination of corruption should be a high priority within the government, business community and common citizens. Confidence and trust in government and business among investors, customers, employees, and the public generally has been eroded by a wave of scandals in recent years. Further, several high profile cases of bribery are currently being investigated or prosecuted.

Those in Governments and other organizations are learning the hard way as to how they can legally and socially be held responsible for the deeds and misdeeds of themselves and their staff due to ineffective or non-existing controls for checking the activities of those involved. In recent years, it is seen that many corporates have even collapsed due to incidences of fraud and corruption involving financial statements, excessive payment of remuneration, etc, due to which many people had lost their savings and even livelihood, eroding the credibility and image of the organization. Examples of common fraud could include theft of plant, equipment and inventory by employees; False invoicing; Theft of funds; Lending fraud; Misappropriation of remittance received by an organization; Credit Card fraud; Theft of intellectual property; Falsification of financial accounts of the organization for undue benefits; Theft of confidential information for private gains; Tax evasion; Money laundering, etc. There could be varied reasons for the increasing number of fraud which would depend on varying factors including type and nature of activities of the organization; its functioning; use and reliance on technology; rapid and continuous changes to business operations, etc, without appropriate safeguards.

All governments and organizations should, therefore, make every effort to ensure that the control systems in place are sound and are designed with a view to prevent fraud and corruption, which could include financial regulations, anti-fraud policies, provision of trained fraud investigators, fraud awareness training for all staff, codes of conduct, etc. However, the threat of control weakness and fraudulent or corrupt activities always remains. To ensure that all weaknesses in internal control and allegations of fraud or corruption, whether actual or perceived, are adequately reported by the staff by using the established procedures or other appropriate action, the organization should devise ways and means of checking it.

India’s National Standards Body, Bureau of Indian Standards (BIS), has prepared a National Standard – IS 15900 : 2010 – which provides guidance for prevention and control of fraud and corruption by an organization irrespective of its size, type, location or nature of activities. An effective system for fraud and corruption control would entail the establishment of documents describing the processes for planning and monitoring of the control measures and the results of these processes. Such documentation will include:
a) a manual for fraud and corruption control;
b) procedures for planning and monitoring of control processes;
c) procedure for receiving and handling information relating to fraudulent and corrupt activities;
d) procedures for conducting investigations and inquiries;
e) a classification of activities that are considered to be fraudulent and/or corrupt and the penal actions that may be taken against delinquent employees;
f) instructions issued to work force describing the desired rules of conduct and preventive measures;
g) documents of external origin that may apply to the organization and to its employees;
h) any other document needed by the organization for effective planning, operation and control; and
j) records required by this standard.

Top management of the organization or Government departments should,
a) establish anti-fraud and anti-corruption policy and strategy;
b) ensure that fraud and corruption control objectives are established;
c) ensure voluntary compliance with internal codes of organization’s principles and ethics and with external/universal guidelines;
d) set up and reinforce high standards of behaviour as the norm while identifying, reducing and rectifying incidences of noncompliance;
e) not send misleading signals and behave in unethical manner while laying down or adopting organization’s policies and practices;
f) ensure that an ethical culture is developed within the organization;
g) make continuous efforts to ensure that fraud and corruption principles and codes are integrated with the various management systems of the organization;
h) conduct management reviews;
j) ensure availability of resources;
k) be accountable and transparent; and
m) create an atmosphere conducive to encouraging employees to report weakness(es) in the system for plugging loopholes as also prevent incidences of fraud and corruption.

Prime Minister has promised a corruption free India. He should immediately issue orders to all Government departments to adopt and implement this standard.

(for more information read IS 15900 : 2010)
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