Analysis
29 December 2021

AFA submits a draft practical guide on anti-corruption accounting controls

On 26 November 2021, the AFA published for public consultation its draft practical guide on anti-corruption accounting controls in companies.

 

On 26 November 2021, the French anti-corruption agency (“AFA”) submitted for public consultation, a draft practical guide on anti-corruption accounting controls in companies.

This guide, which is presented as an educational collection of best practices and illustrations[1], aims to assist companies subject to the obligation provided for in Article 17 of the Sapin 2 Law in the implementation of “internal or external accounting control procedures intended to ensure that books, registers and accounts are not used to conceal acts of corruption or influence peddling”[2].

It sets out general accounting concepts (I) before defining anti-corruption accounting controls (II) and specifying their implementation (III).

 

I.  Keeping accounts is a legal obligation that helps reduce corruption risks

The guide notes that an accounting that complies with legal and regulatory requirements effectively contributes to the prevention and detection of corruption[3].

As a preliminary point, the AFA reminds the legal obligation for all companies to keep accounts that comply with the standards set by the French accounting standards authority (“Autorité des normes comptables”) and that meet five key principles: true and fair presentation, comparability and continuity of operations, regularity and fairness, caution and consistency of methods[4].

Then, the AFA details some of the accounting rules to be implemented (non-offsetting rule, recording of assets at historical cost, keeping of accrual accounts, information retention and prohibition of parallel accounting) as well as the requirements for proper recording of entries, which implies particularly clear objectives and scope of responsibilities between individuals involved in an operation, standardized accounting procedures, and a quality reporting system[5].

 

II. Anti-corruption accounting controls are complementary to general accounting controls and incorporate internal control based on risk mapping

According to the guide, the concept of “anti-corruption accounting controls” refers to the accounting controls mentioned in Article 17 of the Sapin 2 Law[6] and is precisely so called because these controls must be based on corruption risks mapping as it determines where it is necessary to complement corruption-related risks management measures, which include accounting controls, with anticorruption accounting controls[7].

Thus, it appears that anticorruption accounting controls are simply meant to complement or deepen existing accounting controls[8]. For instance, they may be implemented where the risks of corruption are insufficiently covered by existing controls[9], in case of accounting processes (e.g., manual accounting registration or non-existing third-party accounting controls[10])and accounting transactions (e.g., human resources management scheme, expenditure processes without controls and exceptional transactions[11]) that warrant increased caution, or sensitive accounts such as ‘miscellaneous’ accounts[12].

 

III. The implementation of anti-corruption accounting controls is similar to that of general accounting controls

The AFA explains that anti-corruption accounting control methods differ from general accounting methods only in the way they are applied, depending on the risk situations identified by the corruption risks mapping[13]. Thus, the AFA suggests following existing control methods, namely the accounting review method, the analytical review method, the sampling control method, or the comparison with physical reality method[14]. It further suggests that these methods be carried out on standard accounting documents such as the balance sheet, the income statement, the notes to financial statements, the general ledger, the journal, legal registers of the company and the accounting analytical presentation documents[15].

Additionally, the guide states that, similarly to general internal controls, the anticorruption accounting controls are carried out at three levels[16]:

  • A first level of control generally carried out by the person responsible for entering and validating accounting entries;
  • A second level of control that is carried out throughout the year by a person independent of the one who carried out the first-level control, whose purpose is to ensure the proper execution of the first-level anti-corruption accounting controls; and
  • A third level of control (accounting audits) assessing the relevance, effectiveness, and compliance with corporate requirements of anti-corruption accounting controls, and specifically the governance and resources allocated to anti-corruption accounting control procedures and the method of development and application of the first two levels of controls.

The guide further adds that anti-corruption accounting controls must follow a specific and standardized procedure, the purpose of which is to primarily determine the scope of the controls, their durations, and modalities, including a precise definition of the roles and responsibilities of the various parties involved[17]. This procedure itself should be subject to a control system to ensure its adequacy and effectiveness[18].

Finally, the AFA concludes that the results of anti-corruption accounting controls must give rise to a real response from the company, which must, for example, implement corrective measures, update its risk mapping, or conduct an internal investigation[19].

The guide, which should be published in the first term of 2022, will probably be enriched as it is opened for public consultation until 7 January 2022.

Related content

Publication
27 February 2024
New sustainability reporting obligations in France: what’s new?
Navacelle contributes to The Legal Industry Reviews' fifth edition about the transposition of the Corporate Sustainability Reporting Directive (CSRD) in...
Press review
9 February 2024
Press review – Week of 5 February 2024
This week’s press review highlights the acquittal of former minister and mayor of Pau, François Bayrou, the accusation of a...
Press review
2 February 2024
Press review – Week of 29 January 2024
This week’s press review highlights the Transparency report on France's global position in the fight against corruption, Uber's fine in...
Press review
26 January 2024
Press review – Week of 22 January 2024
This week’s press review highlights Amazon’s 32 million euro fine by a French administrative authority for the monitoring of its...
Event
25 January 2024
Internal investigation and data collection
EFB Degree - Internal investigation Internal investigation and data collection: In many respects, data collection is crucial in conducting an internal...
Press review
19 January 2024
Press review – Week of 15 January 2024
This week, the press review covers the validation by the French Supreme Court of Lafarge’s indictment for complicity in crimes...
Publication
THE PRACTITIONER’S GUIDE TO GLOBAL INVESTIGATIONS - EDITION 8
15 January 2024
Practitioner’s Guide to Global Investigations (2024) – GIR
NAVACELLE co-author of the eighth edition of Global Investigations Review’s Practitioner’s Guide to Global Investigations.
Press review
Press review- Week of 8 January 2024
12 January 2024
Press review – Week of 8 January 2024
This week, the press review looks back at the conclusion of three Deferred Prosecution Agreements by Marseille’s Public Prosecutor’s office,...
Analysis
European Commission
10 January 2024
Digital Markets Act: Combating anti-competitive practices in the digital sector
On 6 September 2023, almost a year after the adoption of the Digital Markets Act, the European Commission published the...
Press review
22 December 2023
Press review – Week of 18 December 2023
This week's press review looks at the first hearings in Rabat in the “Qatarargate” corruption affair in the European Parliament,...
Analysis
21 December 2023
Transposition of the CSRD: new sustainability reporting obligations for French companies
France is the first Member State to transpose the CSRD or Corporate Sustainability Reporting Directive with an order issued by...
Analysis
20 December 2023
La Poste case: first decision on the substance of the duty of diligence
On 5 December 2023, after more than three years of proceedings, the Paris judicial court finally issued its decision in...