Volume
3, No. 4 April 2024 (911-919)
p-ISSN 2980-4868 | e-ISSN 2980-4841
https://ajesh.ph/index.php/gp
Effective
Strategies for Corporate Governance and Risk Management in the Public Sector:
Preventing Corruption and Abuse of Authority
Adelia
Azzahra1*, Septien Dwi Savandha2,
Makinde Grace Olubisi3
1,2Universitas
Swadaya Gunung Jati,
Cirebon, West Java, Indonesia
3Babcock
University, Ilishan Remo, Ogun, Nigeria
Email:
adeliaazzahra349@gmail.com1*, dwisavandha9@gmail.com2,
makindeo@babcock.edu.ng
ABSTRACT:
In the era of globalization, good corporate
governance and risk management are crucial, especially in the public sector, to
prevent corruption and abuse of authority. This research aims to identify and analyze effective strategies in corporate governance and
risk management in the public sector, with a focus on corruption prevention.
Using a quantitative research method, data were collected through surveys and
interviews with key stakeholders, including government officials and governance
experts. The results show that structured risk evaluation and effective
information communication can significantly reduce the risk of corruption.
Practices such as strict internal controls and integrated information
technology were found to improve transparency and accountability. Policy
recommendations include increasing transparency, adopting integrated
information systems, and implementing consistent reward and sanction systems to
enhance the integrity of public institutions. However, the study's findings are
limited by the specific sample used, and further research is needed to evaluate
various governance practices across a broader spectrum of public sector
organizations over a longer period.
Keywords: Corporate Governance, Risk Management, Public
Sector, Corruption Mitigation, Sustainable Development.
INTRODUCTION
Good corporate governance
and risk management are critical in this era of globalization, particularly
within the public sector
Recent data underscores
the severity of these issues. According to the 2023 Global Corruption
Barometer, a substantial percentage of citizens across various countries
believe that corruption is worsening
Corruption and abuse of
authority undermine public trust, hinder sustainable development, and result in
substantial social and economic costs. These negative impacts include social
harm, erosion of public trust, and significant obstacles to sustainable development
Previous research has
highlighted various approaches to address this problem. For example, Azleen
However, this research
brings innovation with a focus on effective strategies for corporate governance
and risk management in the public sector, especially in efforts to prevent
corruption and abuse of power
The main objective of this
study is to identify and analyze effective corporate
governance and risk management strategies in preventing corruption and abuse of
authority in the public sector, as well as to evaluate their practical
implementation
Thus, this research is
expected to make a significant contribution to efforts to prevent corruption
and abuse of authority, as well as promote good governance practices in the
public sector. Through the analysis of key factors such as risk evaluation, control
activities, and information communication, this research provides a deeper
understanding of how to strengthen the framework of public organizations to
reduce risk and increase transparency and accountability.
RESEARCH METHODS
This study
uses quantitative research methods to investigate effective strategies in
corporate governance and risk management in the public sector, focusing on the
prevention of corruption and abuse of authority
Data
analysis was carried out using statistical techniques, including descriptive
analysis to describe sample characteristics and inferential analysis to test
the relationship between variables. Thus, this study provides a deeper
understanding of the factors that contribute to the effectiveness of governance
and risk management and provides concrete guidance for policymakers in
improving public institutions' transparency, accountability, and integrity.
This
research method is expected to make a significant contribution to the
literature on corporate governance in the public sector by exploring best
practices and identifying the challenges faced. The quantitative approach
allows for a more systematic evaluation of the implementation of effective
governance strategies in preventing corruption and abuse of authority. With
in-depth data analysis, this study is expected to produce evidence-based
recommendations for policymakers to improve existing policies and practices, as
well as to strengthen the integrity of public institutions, increase public
trust, and support sustainable development at the local and national levels.
RESULTS AND DISCUSSION
Risk Evaluation in Corporate
Governance in Public Institutions
This research highlights
the importance of systematic and structured risk evaluation in identifying weak
points that are vulnerable to corruption and abuse of authority in public
institutions. By applying the COSO (Committee of Sponsoring Organizations of
the Treadway Commission) framework approach, risk evaluation is considered a
crucial initial stage in the risk management process. The risk analysis results
conducted on a sample of public institutions are presented in Table 1, which
shows the priority areas that require further attention.
Table 1. Risk Evaluation in Corporate
Governance in Public Institutions
|
No. |
Potential Risks |
Incidence Rate |
Potential Impact |
Priority Scale |
|
1 |
Lack
of transparency in budget management |
High |
High |
High |
|
2 |
Limitations
in internal control over purchases |
High |
High |
High |
|
3 |
Conflicts
of interest among decision-makers |
Low |
Tall |
Low |
The table above shows the
results of risk analysis conducted on a sample of public institutions,
identifying significant potential risks. Risk evaluation is carried out based
on the level of risk events and potential impacts that can be caused. It is
then given a priority scale to determine the level of urgency in handling or
mitigating these risks.
The emphasis on
transparency in the procurement process, internal financial controls, and
conflicts of interest among board members shows a focus on crucial areas in
efforts to improve corporate governance. Systematic risk evaluation methods,
such as those implemented in the COSO approach, provide a solid foundation for
effective risk management and the prevention of potential problems such as
corruption and abuse of authority.
Information Communication Strategy in
Public Institutions
The results of the survey show that
effective information communication between various organizational units can
significantly reduce the risk of corruption. Approaches involving the
implementation of integrated information systems and periodic reporting have
proven effective in increasing transparency and accountability. Table 2
displays the respondents' perception of the effectiveness of information
communication in public institutions.
Table 2. Perception of the Effectiveness
of Information Communication in Public Institutions
|
No. |
Aspects of Information Communication |
Very Ineffective (%) |
Ineffective (%) |
Quite Effective (%) |
Effective (%) |
Highly Effective (%) |
|
1 |
Between Organizational
Units |
5 |
10 |
30 |
40 |
15 |
|
2 |
Integrated
Information Systems |
3 |
8 |
25 |
45 |
19 |
|
3 |
Periodic
Reporting |
2 |
5 |
20 |
50 |
23 |
The table illustrates the respondents'
perception of the effectiveness of information communication in public
institutions. Generally, periodic reporting and integrated information systems
are rated higher than communication between organizational units, suggesting
that these approaches can increase transparency and accountability in the
public sector.
Implementation of Effective Governance
Practices in public institutions
The implementation of
effective governance practices in public institutions can reduce corruption
incidents, as shown by inferential analysis. Institutions that implement strict
internal controls and periodic training for employees tend to have lower rates
of corruption incidents than institutions that do not implement these
practices. The results of this study are reinforced by Table 3, which compares
the results of the implementation of strict governance practices with those
that do not.
Table 3. Comparison of the
Implementation of Governance Practices in Public Institutions
|
No. |
Governance Practices Implemented |
Corruption Incident Rate |
|
1 |
Strict
Internal Controls |
Low |
|
2 |
Periodic
Training for Employees |
Low |
|
3 |
Consistent
Rewards and Sanctions System |
Low |
This study confirms that implementing
effective governance practices, such as strict internal controls and periodic
employee training, can significantly reduce the risk of corruption in public
institutions. In addition, the implementation of a consistent reward and
sanction system is also important to strengthen good governance and minimize
the potential for corruption.
Discussion
Implications of Outcomes for Public
Policy
The results of this study
provide a strong empirical foundation for the development of more effective
policies in corporate governance and risk management in the public sector. The
findings that structured risk evaluation and effective information communication
can significantly reduce the risk of corruption indicate governments' need for
a more proactive approach
According to the Committee
of Sponsoring Organizations of the Treadway Commission (COSO), risk evaluation
is a crucial initial stage in risk management
Recommendations for Policies
Increased Transparency and
Accountability
The government must
encourage public institutions to increase transparency in budget management and
implement stricter internal controls. Previous studies by Priya et al.
Development of Integrated Information
Systems
The implementation of
integrated information systems has proven effective in increasing transparency
and accountability
Strengthening the Reward and Sanctions
System
To fortify good governance
practices, it is crucial to implement a consistent reward and sanction system
Research Limitations and
Recommendations for Further Research
While this research provides valuable
insights, there are some limitations to be aware of:
1. Generalization of Findings: The study
was conducted on only a specific sample of different levels of government.
Therefore, further research is needed to broaden the scope and generalize the
findings for different governance contexts.
2. Longitudinal Studies: Recommendations
for subsequent research include conducting longitudinal studies to evaluate the
long-term impact of the implementation of different corporate governance
practices. This will provide a deeper understanding of the effectiveness of
corruption prevention strategies in public institutions over time.
CONCLUSION
This study identifies that
the implementation of good corporate governance and effective risk management
is essential in preventing corruption and abuse of authority in the public
sector. The findings suggest that structured risk evaluation and effective
information communication can significantly reduce the risk of corruption. In
contrast, practices such as strict internal controls and the use of integrated
information technology can improve transparency and accountability. Policy
recommendations include increased use of internal controls, integrated
information systems, and the implementation of consistent reward and sanctions
systems to support the integrity of public institutions. However, this study
has limitations on the generalization of findings because the study was
conducted on a specific sample, so further research is needed to expand the
scope and evaluate the long-term impact of different governance practices in
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Adelia
Azzahra, Septien Dwi Savandha, Makinde Grace Olubisi (2024) |
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First publication right: Asian Journal of Engineering, Social and Health (AJESH) |
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