Syndicate content

World Bank Integrity Vice Presidency

Fighting corruption behind the scenes: The evolving and ever important role of forensic audits in international development

Ryna Ferlatte's picture

Ryna Ferlatte heads the Forensic Services Unit of the World Bank’s Integrity Vice Presidency (INT). She has over 20 years of experience in forensic accounting, audit and corporate financial accounting, and reporting. In this interview, she provides a window into the field of forensic auditing and explains why it's so important to global anti-corruption efforts.

Why do we know so little about forensic auditing?

Big corporate fraud and corruption cases like Enron, Satyam, Siemens and others offer the basis of knowledge for what forensic auditors can contribute, but forensic accountants often work in the background of these large investigations.  These cases show that the standard checks and balances, such as compliance, internal audit and external audit, are not always enough to prevent fraud and corruption.  The role of an independent oversight function such as INT is critical and the World Bank has been a leader in including forensic auditing as part of the exercise of its audit and inspection rights of Bank-funded contracts.  But this is not the only way forensics can add value.

Today, there is more recognition that forensics can be used not only to identify and quantify fraud and corruption losses, but also can serve as a deterrent and help reduce instances of such wrongdoing. And while forensic standards and tools are evolving globally, the results of forensic audits emphasize its value as an effective tool that can be also used proactively to cut financial losses in vulnerable sectors and high-risk projects.

Broken Windows: Mending the Cracks

Leonard McCarthy's picture

When the World Bank investigates and sanctions a major corporation for corruption related to one of its project, the deterrent impact is readily apparent. However, not every case the World Bank investigates is a major corruption case. In the past year, the World Bank Integrity Vice Presidency (INT) received many complaints related to fraud, and it is important to demonstrate responsiveness to complainants who report credible allegations as well as fix the weaknesses identified. Sanctioning cases of fraud also sends a strong message about abiding by high integrity standards in World Bank-financed projects. 

Left unchecked, fraud erodes development effectiveness. It often coincides with poor project implementation, which can result in collapsing infrastructure or the distribution of counterfeit drugs. It causes costly delays and can lead to direct financial losses for countries which cannot afford it. Fraud also fosters a negative enabling environment, creating opportunities for more serious and systemic misconduct to occur.

Corruption Hunters Leave the Washington Meeting with Renewed Energy and Vigor for Action

Dina Elnaggar's picture

The energy that members of the International Corruption Hunters Alliance (ICHA) brought to their first meeting is beyond words.  “Stealing is bad enough, ripping off the poor is disgusting.” With those words, the World Bank President kicked off a 2-day momentum for the Corruption Hunters to “draw strength, learn from one another and create their global alliance.” And rightly so, they did.  A “marketplace” showcasing select country experiences offered some space for some delegates to speak firsthand of their challenges and lessons of success and failure.