How does a QC company prevent bribery during an audit? As a general rule, a QC company should not accept any form of compensation from their client’s suppliers as this could present a conflict of interest. In day-to-day operations though, the reality is a bit more gray. Factory staff may provide meals, transportation, accommodation, medical assistance or other benefits to auditors simply because there are no other options available. These benefits could lead to impropriety if not dealt with in a clear and above-board manner. The real question you should be asking is?how does your QC company keep minor transactions above board?
Prevent Bribery with the Factory Integrity Declaration Form
InTouch is not shy about our dedication to integrity. InTouch’s close-knit culture, Western management and Code of Ethics all help to prevent corruption during inspection. But there’s one document – one of the most frequently used in our company – that serves, specifically, to prevent bribery: the Factory Integrity Declaration Form. InTouch has worked with thousands of factories. We have performed tens of thousands of individual inspections. And the Factory Integrity Declaration Form is required for each and every one. This form is written both in English, so it can be reviewed in the future, and in Chinese, to ensure the factory representative knows what they’re signing.
The form itself is broken into the following four parts:
This section includes who has performed the service (which inspectors were at the factory that day) and which inspection was performed. This lets us refer to the final inspection report, factory information & location and client details.
Detail of Benefits Received
The specific part of the form that addresses benefits and helps to prevent bribery is the Detail of Benefits Received. This is where the FACTORY (not the auditor) records any free or subsidized benefits they have given to the auditors for the duration of the service. These benefits could include money, gifts, favors, accommodation, meals, transportation, or anything else that was not a basic necessity needed to conduct the actual inspection.
The InTouch Declaration
This is an explicit statement outling InTouch’s requirement that employees adhere to all local laws & regulations. This section also includes instructions for contacting our Director of Compliance in the event the factory ever feels that the inspectors have breached the InTouch Code of Ethics by requesting a bribe.
This is binding conclusion of the Factory Integrity Declaration Form. By signing the form, the factory representative confirms that everything they have listed above is FACT. This prevents the factory or the auditor from reneging on the information listed in the document. Holding both the inspector and the factory accountable for the information shown on the form helps to prevent bribery.
One might argue that this form could be ineffective if the factory simply gave the auditor a bribe and neither party documented it on the form. But the main purpose of the form is that it encourages open communication between the auditors and management. The form serves to protect both the factory and InTouch from later claims of impropriety.
The Factory Integrity Declaration Form in Action
To illustrate the importance of always filling out a Factory Integrity Declaration Form at every inspection, let’s look at a couple real-world examples:
Medication for Cash
Let’s suppose that, at the end of the inspection, an auditor develops a mild fever. The factory, acting as a Good Samaritan, gives the auditor an over-the-counter fever reducer. The auditor gives back a fair approximation of the medication’s price in cash. As a general rule of thumb (and according to InTouch’s policies), any exchange of cash between a 3rd party auditor and a supplier should ALWAYS be avoided to eliminate any hint of impropriety. So? even though these actions were performed in good faith, the fact remains that money still changed hands. By reporting it in the Factory Integrity Declaration Form, InTouch can track similar instances, and factories and auditors slowly become more comfortable reporting freely any instances that could, potentially, be considered improper.
Imagine a rigorous inspection resulted in an unfavorable report. After receiving a disappointed email from the client, the factory scrambled for an explanation for the poor inspection results. In an attempt to re-assign blame, a factory representative reports that an auditor requested that the factory provide their accommodations that night for free.? What they fail to mention is that there were 3 other QC companies on-site that day performing their own inspections. It’s quite possible (they couldn’t quite remember) that it was an auditor from one of these other companies that made the request. In this case, the Factory Integrity Declaration was filled out the same day of the service with InTouch’s auditor in the room with them. So there was no way to confuse which auditor they were writing about. Upon reviewing the Factory Integrity Declaration of this service, InTouch could say with much more certainty that it was not our auditor that had requested the accommodations.
There’s no question that factory audits and product inspections are situations in which the opportunity for an auditor to accept a bribe might present itself. After all, both the inspection company and the factory are often at odds working with the same client. But by setting up the proper procedures day-to-day, the two QC companies can prevent bribery and corruption, eliminate gray areas of operation and encourage transparency.
InTouch’s Factory Integrity Declaration Form provides one such procedure that serves as a perfect example. For every inspection, auditors are required to document any benefits – whether they be accommodation, meals, transportation or other. Both the factory representative and the attending inspector confirm the information and sign the form. This process is a standard part of all of our services at factories because it holds both the inspector and the factory representative accountable.
So implement a similar process, hold your people accountable and prevent bribery during your audits!