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FORENSIC AUDITING: AN INTERNATIONAL APPROACH

Prof. Felix Pomeranz


DEFINITION


Briones has identified three forms of corruption: bureaucratic/administrative, syndicated/criminal, and political. The terms are not mutually exclusive. Bureaucratic corruption is perpetrated by government employees; examples include petty thievery, bribes, "commissions," and so forth. Syndicated corruption is linked to organized crime; drug running is one example. Political corruption is often identified with elected officials; it includes awarding contracts improperly, wrongfully influencing government policy, and using influence to gain personal or political benefits (Briones 1987). 

The United States Defense Department formulated a broad definition of fraud by government employees: "any willful or conscious wrongdoing that adversely affects the government's interests The following are examples of fraud or other unlawful activity: ...charging personal expenses to government contracts; diversion of government property or funds for unauthorized uses; submission of false claims ...; intentional mischarging ...; regulatory or statutory violations, such as bribery, theft ..., graft, conflict of interest, and (acceptance ot) gratuities; and any attempt or conspiracy to engage in or use the above devices" (Larson 1983).

An article about the flight of capital from Mexico provides a sweeping description of bureaucratic corruption: 

There is ...plenty of outright graft in converting dollars borrowed by government projects into private wealth. The actual pathways are endless: phony intermediary companies that recontract with foreign suppliers. ..and take a hefty spread; importers who get pennits to purchase foreign exchange for imports that either never get bought or are wildly over-invoiced; developers who get public loans for projects that don't exist; local "consultants" who are paid by U.S. suppliers in New York dollar accounts, and so on (Henry 1986, p.22). 

The thrust of this paper is toward coping with bureaucratic corruption in government, which, according to Briones (1987), lends itself to cost containment and control.

 

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