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Despite aggressive exertion of the Malaysian government against corruption, the issue of ethics and integrity are still rampant and it is one of the important cause in organizational failure. As such, the government had introduced the Government Transformation Programme (GTP) 1.0 and 2.0. This is to enhance corporate ethics and integrity among business corporations to combat any poor governance practice may lead to severe corruptions. It is reported that Malaysian Corruption Perception Index 2013 (CPI) has reached a score of 50 point with the rank of 55/177 (prior to 2013, CPI scores never reached the 50 point mark). Small enterprises were also observed to get involved in bribery between 8% to 9% of their revenue for getting licenses and permits. Bribe payers index of Malaysia in 2011 showed a score of 7.6 out of 10 in which it is below the global average of 7.8. The higher the index the more unlikely for any firm to engage in bribery.

To mitigate the issue of bribery, it is vital to elevate the confidence among investors by portraying a sustainable business competitive advantage yet still promote a healthy competition among businesses in Malaysia. Therefore, besides effective governance, in order to dent on corruption, corporate ethics and integrity systems should be institutionalized. Nevertheless, currently the corporate ethics and integrity framework at corporate levels are still scarce. The lack of specific and practical instrument in fighting corruption as well as controlling business misconducts will add more severity to this issue. As such, this proposal aims to develop corporate integrity systems to facilitate organization to assess and measure the progress in making a formal and transparent commitment to ethics and integrity business. The system hopefully can be used to inculcate integrity practices in the corporate sector and also to promote corporate social responsibility and accountability, widen and strengthen good business ethics, create ethical work place environment, enhance corporate governance framework by instilling a culture of professional conduct that is free from corruption.

Understanding the root causes of corruption risk and learning about the most effective corruption prevention mechanisms are critical in reducing the incidence of corruption. It is reported that organizations usually spend a lot of efforts in detecting corruption rather than preventing them. Historically, 20% of the effort has been on prevention or deterrence, while 80% has been on detection and investigation. Nowadays, there is a need to reverse the emphasis  and place 80% of the focus on prevention and deterrence. Hence the old proverb that an ounce of prevention is worth a pound of cure holds true with corruption. This proposal therefore focuses on identifying the existence and effectiveness of corruption prevention mechanisms amongst public and private sectors in Malaysia. The proposal solicits the views of corruption investigators on the existence and effectiveness of corruption prevention mechanisms within the two sectors. 

Recent accounting scandals, where companies prepared fraudulent financial statements, and auditors issued clean opinions on the fraudulent statements, have eroded the trust among participants in the financial markets. Stakeholders are now experiencing a movement along a continuum from a society that trusts everything and audits nothing to a society that trusts nothing and audits everything. Recent issuance of Shariah Governance Framework by the Central Bank of Malaysia has shown a significant impact towards the establishment of the Shariah audit. Consequently, the Shariah Committee is expected to play a critical role in ensuring Shariah compliance of the transactions and activities of the Islamic organizations. Since the emergence of the Islamic finance industry is to implement Shariah compliant financing practices, the role of Shariah governance guidelines is to ensure that it meets the objective of the Islamic financial industry. This is also in line with the government’s vision to make Malaysia as a global Islamic financial hub for Islamic banking and finance activities by the year 2016. There is a need to have a regular independent Shariah Audit and properly in place risk assessment. The complexity and dynamism of the industry has increased the necessity of Shariah audit and risk assessment to be more comprehensive and integrated. This is to provide a strong assurance to stakeholders and other users on the Shariah compliance of the Islamic finance industry. This proposal aims to assess risk assessment and Shariah audit for Islamic Financial Institutions towards better Shariah Compliance Framework.



 Corporate Ethics and Integrity System: Good Governance Measures

The research will employ mixed method approach involving questionnaires and interviews as the data collection techniques. In order to develop the Corporate Integrity Assessment Model (CIAM), an extensive literature review will be carried out leading to the conception of initial model. Focus group discussions will be engaged to refine the initial model leading to the establishment of the finalized Corporate Integrity Assessment Model. Based on the developed model, a corresponding instrument i.e. questionnaire will be developed. The questionnaire will undergo the robust development process involving pre-test and pilot test with appropriate number of samples. The questionnaire will be automated or computerized into web-based information systems that will enable data to be collected via on-line. The CIAM and its corresponding questionnaire will be used to assess the effectiveness of governance in enhancing integrity.

 Corruption Risks and Mitigation Approaches in Public and Private Sectors

This research will use three instruments, namely questionnaire; focus group and face-to-face interview. The self-administered questionnaire for data collection embraces questions relating to governance infrastructure in combatting corruption in public and private sectors. Sampling used in this research will come from the federal government/ministries, federal statutory bodies and local government as well as the private sectors. The respondents will be among the technical employees (e.g. architects, engineers and accountants) and non-technical employees.  Next, this research will conduct focus group in which a group of selected people will be invited for focus group discussion relating to issues on corruption as well as discussing about their opinions with regards to the awareness and commitment to mitigate corruption level in Malaysia. They will also be expected to recommend the initiatives to be implemented by the Malaysian government in curbing corruption.



 Risk Assessment and Shariah Audit towards Shariah Compliance

This research employs case studies to identify the impact of the Shariah audit function in assuring Shariah compliance of the activities and operations of the organization. The case study research will be conducted among Islamic organizations aim to examine the gap between the existing conventional audit practices the current practices. It is aimed to come up with a comprehensive and integrated Shariah audit framework to comply with the objective of the Shariah (Maqasid Al-Shariah). This study surveys different groups of respondents who are involved directly or indirectly, with the process of shariah compliance/auditing in Islamic organizations in countries that practice Islamic finance by employing survey method of questionnaires and interviews. This is to obtain insight into the existing practices as well as what is expected by the respondents or ‘what ought to be’ the shariah auditing in the Islamic finance industry.