The contribution of King II report in the fight against corruption in the South African public sector with special reference to national departments

Abstract

The purpose of this study was to investigate the contribution of the King II Report on Corporate Governance for South Africa in the fight against fraud and corruption in the South African public sector. Four areas of good corporate governance as recommended by the King II Report, i.e. internal audit, risk management, audit committee, and ethics (fraud prevention) have been identified for the purpose of this study. Corruption is a significant problem both in major and developing countries. Like organised crime, corruption is shaped by the lack of strength of the control measures by both private and public sector. It indicates poor governance in both private and public sector institutions. On the other hand, corporate governance relates to organizational arrangements put in place to provide an appropriate set of checks and balances. A literature review was conducted to obtain an understanding of a number of fundamental concepts of good corporate governance as recommended by the King II Report such as; risk management, internal audit, audit committee, and ethics (fraud prevention), including their applicability to the public sector institutions. The King II Report lays down the framework for corporate governance in South Africa. The report provides guidelines on issues of financial performance, risk management, remuneration, audit committees, sustainability reporting, stakeholder interest, the balance of power and the role of directors within a business enterprise. The empirical study made use of both quantitative and qualitative methods including literature review as well as a structured questionnaire that was sent to 37 national departments. The targeted sample was all the Directors-General of the national departments or their delegated officials. A response rate of 78°/o was achieved. The major findings of this investigation was that the majority of national government departments have taken a positive step towards the implementation of the King II report, however, a lot of work is still required to be done in order to achieve full implementation. The study recommends steps to be taken by the national departments in order to fully comply with the requirements of the King II Report and also address gaps identified by the study. Further investigations will still be required in the following areas: • The extent of implementation of good corporate governance (King II Report) principles focusing at provincial and or local government; • The contribution of good governance (King II Report) towards the fight against fraud and corruption in local or provincial government.