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The daily work against acts that reinforce inequality and divert precious resources for social good has gained importance, so much so that the United Nations (UN) Convention against Corruption, adopted in Mexico in 2003, already has 140 signatories.
The Organization for Economic Cooperation and Development (OECD) calculates that fraud and illicit activities make up 5% of the world’s GDP per year, equivalent to more than U$S 3.6 trillion. Meanwhile, the UN calculates that, to make the Sustainable Development Goals (SDGs) viable, an investment of US$ 5 trillion per year until 2030 would be necessary. If the diverted amounts were directed towards meeting the SDGs, we would already have around 70% of the necessary budget.
The fight against corruption is a commitment that permeates society as a whole: from government entities, business leaders, to citizens who are vigilant and attentive to the problems that corruption can cause, whether directly or indirectly. Linked to this theme, the International Federation of Accountants (IFAC) launched, in September, an Action Plan to Combat Corruption and Economic Crimes, such as money laundering, bribery, tax evasion and transgressions.
IFAC's plan is based on five pillars: education and professional development; support for international standards; formulation of prevention and control policies based on evidence contained in high-quality information, much of it generated by the balance sheets and independent auditor’s reports; engagement and partnership of the profession at a global level; and ensuring that the views and voice of the accounting profession are heard.
In an analysis of the IFAC plan’s five pillars, the importance of the independent auditors’ work in the fight against corruption and economic crimes is clearly perceived, since they add transparency and reliability in financial and non-financial reports, such as financial statements and sustainability reports. It is true that the prevention and investigation of incidents are the primary responsibilities of managers at companies and public bodies, but the auditor has a permanent duty of skepticism, a virtue that, combined with technical capacity, knowledge and professional competence, has enabled preventing and/or identifying suspected crimes and frauds around the world.
It is noted that the five pillars are based on the need for active participation of the entire ecosystem of companies and public institutions, with the accounting profession as the epicenter and protagonist of the process of combating corruption and fraud. Additional key actors are academia, governance agents, governments, the press, business organizations and society itself.
In addition to professional skepticism, audit procedures and professional judgment, the auditor may encounter suspected money laundering operations, as provided for in CFC Resolution No. 1,445/2013. It is not up to the auditor to legally prove that it is in fact an illegal act. He is responsible for communicating said situations to the entities responsible for the company's governance, in addition to reporting to the Financial Activities Control Board (COAF). After communicating with governance, the auditor obtains management's responses and informs the actions and evidence necessary to continue the work.
In order to contribute to this complex topic, Ibracon, Brazilian Institute of Independent Auditors, issued Technical Notice 03/2021, with guidance to professionals on the approach and impacts of their work on the financial statements of entities related to non-compliance or suspected non-compliance with laws and regulations, including illegal acts or fraud.
Ibracon has been proactive in the production and improvement of standards, participating with suggestions at national and international public hearings and carrying out several information dissemination initiatives, such as the creation of the Shadow Investigation Working Group, the promotion of webinars and professional development activities involving the topic, technical documents for clarification to auditors and associated audit firms, working with the press and journalists, and meetings with regulatory bodies and other relevant stakeholders. These activities align with the Independent Audit tenet: Relevance of audit to the market and society.