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FIVE STEPS OF CORRUPTION REDUCTION
Management accountants can help to clean up corruption via education, partnerships, standards, and global policy frameworks.
BY DANIEL BUTCHER
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THE GLOBAL COST OF CORRUPTION, INCLUDING BRIBERY AND THEFT, is approximately $3.6 trillion annually, which is around 5% of global gross domestic product, according to the World Economic Forum (bit.ly/3Fsekfo). In September 2022, the International Federation of Accountants (IFAC) issued the fivestep Action Plan for Fighting Corruption and Economic Crime (Anti-Corruption Action Plan) for accounting and finance professionals to help clean up such corruption through education, partnerships, standards setting, and global policy frameworks. Finance professionals play a pivotal role in fighting corruption, according to Scott Hanson, director of policy and global engagement at IFAC.
What is corruption?
First, people steal public funds. Second, there’s informal taxation through demanding bribes. This can cause costs to go up with no commensurate increase in the quality or quantity of products or services. Third, competition is distorted when lower-quality goods and services are purchased at worse prices.
“In all three scenarios, the taxpaying public isn’t getting the full potential benefit from their tax contribution,” Hanson says. “You also have indirect impacts like stymieing investment and entrepreneurship.”
The money that’s lost to corruption could’ve funded initiatives geared toward achieving critical objectives. The United Nations (U.N.) notes that trillions of dollars of annual global investment are needed to achieve the U.N. Sustainable Development Goals (SDGs).
“Essentially, we’re losing half of the money needed to achieve the U.N. SDGs to corruption, which we simply can’t afford,” Hanson says. “The public and private sectors need to work together to counter corruption and economic crime at the global and domestic levels.”
The seventh SDG— Affordable and Clean Energy—states that financing a transition to cleaner energy requires significant public investment, married with effective markets and level private-sector competition, which corruption significantly constrains.
“These issues are complex and involve a number of actors—that’s why IFAC’s Anti-Corruption Action Plan focuses on how the