English

PwC Vietnam NewsBrief – October 2014
Forensics
Conflicts of Interest
What is a Conflict of Interest?
A Conflict of Interest (“COI”) occurs when
employees have undisclosed economic or
personal interest in a transaction that
adversely affects their employer (extracted
from The Association of Certified Fraud
Examiners “ACFE”).
All organisations uphold the principle that
employees must act in good faith and in the
best interests of their employer or
organisation.
It is a COI when employees channel their
employer’s procurement or sales to
members of their immediate family
(defined as spouse, child, sibling, parent,
stepchild, step-parent, as well as mother-,
father-, son-, daughter-, brother-, or sisterin-law). If a relationship with a distant
relative or friend could influence the
employee’s objectivity, then it is also a COI.
PwC
Common types of COI
Purchase Scheme - employees direct
purchases from a company in which they
have a personal interest.
Sales Scheme - employees abuse their
position to sell at lower prices or delay
billing to a company in which they have
an undisclosed interest. They may also
establish a company to compete with the
current company and lure their
employer’s clients and staff to their own
company.
Detection of COI
The common ways to uncover COI are:
• Tip-offs and complaints (whistle
blowing)
• Data analysis of suppliers/customers
and employees/their families
• Review of supplier and customer
ownership information
• Interviews of management on
favourable treatment/terms given to
suppliers/customers
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information
contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness
of the information contained in the publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty or care for any
consequences of you or anyone else acting or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Dealing with COI – the Three Principles
To get in touch, please
contact PwC Vietnam
at +84.(8) 3823.0796
And ask for:
[email protected]
Director, Advisory Services
Risk Consulting & Forensics
or
[email protected]
Associate Director
Advisory Services
Risk Consulting & Forensics
When there is a COI transaction, it must be disclosed properly to the
employer, the conflicted employee abstains from decision making on the COI
transaction, and prices/business terms are kept at arm’s length.
Management’s role is to ensure compliance and monitoring through
collaboration with the entire organisation, suppliers and customers. The three
principles recommended to address COI risk are:
Change the norms: gradually change the mindset of internal and
external parties in respect of potential COI, especially in relation to interest
disclosure, to promote transparency throughout the organisation.
Embed into policies and procedures: a system for preventing and
resolving COI should be a key agenda item in the anti-fraud framework.
Improving the system of regulating COI would also help address the emerging
challenge of organised procurement fraud.
From word to action: Implement employee and supplier/ customer
screening, periodical reviews, independent audits of purchase/ sales standing
data and transaction data to alert as to risks and/or detect potential fraud.
PwC Anti-fraud Framework
PwC
At PwC, we employ our globally proven anti-fraud framework to offer a wide
range of forensic services to our clients; from setting the tone, training,
establishing core policies and procedures, to investigations. Speak to us and
we will work with you in relation to your fraud risk concerns in Vietnam.

Download Report