Anti-fraud, bribery and corruption response plan

Introduction

1. This is a joint response plan adopted by South Oxfordshire District Council and Vale of White Horse District Council.

2. This response plan forms part of the councils’ anti-fraud, bribery and corruption policy. It covers the councils’ response to suspected or apparent irregularities affecting resources belonging to or administered by either council or fraud, bribery or corruption perpetrated within or against either or both councils.

3. Definitions of what constitutes fraud, bribery, corruption and bribery can be found in the anti-fraud, bribery and corruption policy.

Note: As well as using this policy and its associated response plan, any person employed or engaged by the relevant council who makes a report of suspected activity, should refer to the councils’ whistleblowing policy for guidance.

Who this response plan applies to

4. People involved with either council in any way should know what to do in the event of fraud, bribery or corruption, so that they can act immediately. These people include, but are not limited to, council employees (including temporary and agency staff), councillors, co-optees (those invited to join the councils’ committees as independent members or because of their expertise), partners, contractors, suppliers, voluntary organisations and members of the public.

5. This response plan will help people to understand how the councils will deal with any concerns that may arise. However, it primarily provides information to employees who may be party to cases of fraud, bribery or corruption when receiving a report or becoming involved in the investigation of suspected fraud, bribery or corruption.

Links to strategic objectives

6. This response plan underpins the councils’ strategies, initiatives and work plans.

Aims and scope of this response plan

7. Using this plan will enable each council to:

· prevent further losses of funds or other assets where fraud, bribery or corruption has occurred and maximise the recovery of any loss

· reduce adverse impacts on the councils’ business

· minimise the occurrence of fraud, bribery or corruption by taking prompt action at the first sign of a problem

· minimise any adverse publicity for the councils suffered as a result of fraud, bribery or corruption

· identify any lessons that can be acted upon in managing fraud, bribery or corruption in the future and

· identify the perpetrator and maximise the success of any disciplinary or legal action taken.

8. This response plan is not limited to fraud, bribery and corruption but is applicable to any suspected act of financial impropriety. This includes any act that puts the councils’ resources at risk.

9. The additional sources of information section in this response plan contains a list of other documents that people should refer to when reading this plan and its associated policy.

Action required at point of discovery

10. Either council may become aware of a suspected fraud, bribery, corruption or an irregularity through a number of means, including the following:

the councils’ financial procedure rules;
the whistleblowing policy;
planned audit work;
operation of proper procedures
Anti-Money Laundering Policy

11. Appendices A and B to this response plan provide further guidance on detection and awareness (appendix A) and action and controls for fraud prevention (appendix B).

12. A person may raise a concern verbally but preferably in writing to ensure they reflect allegations accurately to those conducting any investigation that may arise. The councils’ whistleblowing policy provides guidance including help on responding to allegations. Some information is set out below.

13. In a written allegation, an individual should include any background information including names and relevant dates, places and the reasons for the particular concern. However, an individual can raise a concern by telephone or in a meeting with the person they are notifying of the concern. The earlier the individual raises a concern, the easier it is to investigate the allegation and/or take preventative action.

14. An individual may choose to report the concerns anonymously. Concerns expressed anonymously are much less powerful and therefore more difficult to investigate. The monitoring officer will use their discretion in deciding whether to progress an anonymous allegation beyond the initial enquiry stage.

15. When reporting a concern, an individual must not:

l approach or accuse any individuals directly

l convey suspicions or facts to anyone (within or outside of the councils) other than those indicated in the councils’ whistleblowing policy, unless specifically asked to do so by the monitoring officer, the section 151 (chief finance) officer if they have become responsible for the case, or investigating officer (if the case has progressed to investigation)

l attempt to investigate the matter unless asked to do so by the monitoring officer, the section 151 (chief finance) officer if they have become responsible for the case, or the investigating officer (if the case has progressed to investigation).

16. When reporting a concern, the individual must retain all evidence, passing it to the monitoring officer, the section 151 (chief finance) officer if they have become responsible for the case, or the investigating officer (if the case has progressed to investigation).

17. As well as obtaining guidance from the councils’ whistleblowing policy, Protect (protect-advice.org.uk) will give free,confidential and totally independent advice on how to proceed (by email or telephone 02031 172520).

Additional information for employees: whistleblowing

18. Any employee suspecting fraud, bribery, corruption or an irregularity should refer to the councils’ whistleblowing policy and report it immediately to their line manager or the head of service. This depends however, on the seriousness and sensitivity of the issue involved and whom the individual suspects of malpractice. For example, if an employee believes management is involved in a suspected fraud or a potential conflict of interest exists, an employee can choose to inform:

l the chief executive,

l a head of service,

l the head of legal and democratic (as monitoring officer),

l the internal audit manager.

General public responsibilities

19. The Councils’ expectation is that residents, service users and other members of the public will not tolerate abuse of the Council’s assets or services. They are therefore encouraged to report any suspicions or knowledge they may have regarding any acts of fraud and corruption being perpetrated against the Council.

20. The public are made aware of how to report suspicious activity. The contact numbers/addresses are secure and all referrals are treated professionally and in confidence.

21. The email address to make reports to is: MomitoringOfficer@southandvale.gov.uk

The recipient’s role in receiving a report of suspected fraud, bribery or corruption

22. On receiving an allegation of fraud, bribery or corruption, the employee (it is generally assumed that this would be a line manager or the head of service within the councils) should:

l treat the report seriously and confidentially

l give due consideration to all concerns

l familiarise themselves with the whistleblowing policy and make the policy available to employees making any report

l reassure the individual that they will not suffer from any reports made in good faith

l obtain or prepare a written record of the concerns from the person making the allegations. This should ideally include:

l background details and nature of the suspicions (including relevant names, dates and locations)

l details of the job and responsibilities of the individuals implicated

l the reasons why the person raising the matter has concerns

l details of action (if any) taken to date before this concern was raised

l a description of the systems, controls and procedures operating within the area of the alleged abuse

l retain evidence in a safe place, taking care not to interfere with the evidence

l report the matter immediately to the monitoring officer.

23. Besides gathering the information set out in the preceding paragraph, the recipient of an allegation must not attempt to collect further evidence or carry out any investigation unless asked to do so at a later stage by the investigating officer. This may damage any future enquiry if evidence is not in a legally admissible form.

Making initial enquiries: the monitoring officer

24. In order to protect individuals and each council the monitoring officer, who has the authority to act independently, will deal with initial enquiries. The purpose of the initial enquiry is to establish whether there are reasonable grounds for the concerns raised so that, if necessary, they may instigate further investigation.

25. During the initial enquiry, the monitoring officer will:

l determine the factors that gave rise to the suspicion

l examine factors to determine whether any irregularity has occurred (i.e. any incident or action that is not part of normal operating systems or the expected course of events) and

l where necessary, carry out discreet enquiries with staff and/or review documents.

25. The monitoring officer will then consult the chief executive, section 151 (chief finance) officer and the internal audit manager. They will agree whether an investigation is appropriate and, if so, whether the responsibility for dealing with the report under the whistleblowing policy will pass to the section 151 (chief finance) officer and what form the investigation should take. Where appropriate they will assign an appropriate employee (investigating officer) to investigate the concern.

26. The monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, can decide to take no further action if a complaint appears to be trivial or malicious.

27. If the concern raised involves the monitoring officer, the chief executive will nominate a responsible senior employee to conduct initial enquiries with the same authority that the monitoring officer would have.

Prevention of further loss

29. Where initial enquiries provide reasonable grounds to suspect a councillor, co-optee or employee of fraud, bribery or corruption, the monitoring officer in consultation with the chief executive, section 151 (chief finance) officer, and the internal audit manager, will decide how to prevent further loss. This may require the suspension of a suspected employee. The head ofcorporate services will advise on the appropriate means to suspend an individual.

30. It may be necessary to plan the timing of the suspension to prevent the suspect(s) from destroying or removing evidence that may be needed to support disciplinary or criminal action.

31. The head of corporate services and the technical and facilities manager will advise on the appropriate procedures to suspend the individual(s) and how to deny access to the councils’ buildings, whilst the suspect(s) remain suspended. The monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, will instruct the head of corporate services to withdraw without delay access to the councils’ computer systems from within the councils and the extranet.

32. In such circumstances, the person dealing with the suspension of the suspect(s) will approach them unannounced and will inform them of their suspension. They will make arrangements to ensure that the suspect(s) remain under supervision at all times before they leave the council’s premises. The suspect(s) will be allowed to collect personal property under supervision, but will not be able to remove any property belonging to the councils. The person dealing with the

suspension will ask the suspect(s) for any security passes and keys to premises, offices and furniture.

33. The monitoring officer, the chief executive, section 151 (chief finance) officer and the internal audit manager will consider whether it is necessary to investigate systems other than those that gave rise to the suspicion, through which the suspect may have had opportunities to misappropriate the councils’ assets.

Management, retention and security of documentation

34. The best form of evidence is original documentation. Where it is not possible to obtain originals, for whatever reason, a copy will normally suffice. The copy should be clearly endorsed as a copy and certified as a true copy of the original. The person taking the copy should certify the copy from the original source document.

35. The monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, becomes responsible for the secure retention of any documentation in relation to the concern raised from the point that someone raises a concern until any initial enquiries are complete. The monitoring officer, or the section 151 (chief finance) officer will hold documentation in one location and will restrict access to those people authorised to view or use it.

36. The monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, will ensure that all documents relevant to the enquiry contain clear referencing, indicate the author of the document or who obtained it, the purpose of the document and the date it became active within the enquiry. The monitoring officer, or the section 151 (chief finance) officer will ensure that information cannot be tampered with, that no marks are made on original documentation and a record kept of anyone handling the evidence. The councils will comply with the Data Protection Act at all times.

37. Once the monitoring officer, the chief executive, section 151 (chief finance) officer and the internal audit manager agree that a formal investigation is required, the monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, will establish an investigation file. The file should state clearly the name of the investigating officer, the names of the employees assigned to the investigation support team, and the name of the overseeing officer who will normally be the monitoring officer or the section 151 (chief finance) officer. The monitoring officer will draft an executive summary, outlining all the events that have taken place leading up to the creation of the investigation file.

38. Once the terms of reference have been established, and an investigating officer identified, the investigating officer shall be responsible for the secure retention of any documentation in relation to the investigation as set out in the preceding paragraphs in this section.

39. The investigating officer will be responsible for maintaining a diary of events, recording all significant events, meetings, interviews, telephone calls and correspondence details.

40. Once the investigating officer completes an investigation, they will return all investigation documentation to the custodianship of the monitoring officer.

The investigation

Commissioning an investigation

41. If an investigation is required, the monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, will consult with the chief executive, and the assurance manager and nominate an appropriate employee (investigating officer) to investigate the concern.

42. Before the investigation commences, the monitoring officer or the section 151 (chief finance) officer if they have become responsible for the case, in consultation with the chief executive and the internal audit manager will:

l agree detailed terms of reference with the investigating officer setting out the objectives and scope of the investigation

l take advice from the head of corporate services to ensure that the investigation is undertaken in a manner which preserves the rights of the subject(s) under the councils’ disciplinary procedures and that the correct suspension process follows where necessary and

l ensure that in accordance with the councils’ translation and interpretation policy, where necessary, staff will have access to an interpreter or signer in order to support them through the process

l consider what communication needs to be made with other agencies (i.e external audit, the police).

43. The type of investigation required will be set out in the agreed terms of reference. In practice, a fact finding investigation may establish facts, which lead to a formal investigation.

The investigating officer

44. The role of the investigating officer (and their supporting team), is to seek to establish facts in an independent, objective and professional manner.

45. The investigating officer will:

· carry out an investigation in accordance with the councils’ approach for compiling investigation files and collating and documenting evidence

· deal promptly with the matter

· record all evidence that has been received

· ensure that evidence is sound and adequately supported

· make secure all of the evidence that has been collected

· where appropriate, contact other agencies

· when appropriate, report to the monitoring officer, or the section 151 (chief finance officer) if they have become responsible for the case.

46. The investigating team will complete the investigation in accordance with the agreed terms of reference.

47. The investigating officer will:

· maintain familiarity with the councils’ disciplinary procedures when dealing with employees, to ensure that evidence requirements are met during any fraud investigation

· establish and maintain contact with the police

· establish whether there is a need for members of the investigating team to be trained in the evidence rules for interviews under the Police and Criminal Evidence Act 1984 (PACE) and

· ensure that staff involved in fraud investigations are familiar with and follow rules on the admissibility of documentary and other evidence in criminal proceedings

· hold securely any documentary evidence during the course of the investigation.

Conducting an investigation

48. Once appointed, the investigating officer will decide whether the suspicions or allegations have any substance. They may have no substance, in which case the relevant council will take no further action.

49. If the investigating officer believes there is substance to the allegations, they will consult with the head of corporate services and the section

151 (chief finance) officer. Either of the following courses of action will follow:

a) If there is no evidence of criminal activity, the investigation will continue in accordance with council policy and in accordance with the councils’ disciplinary procedures.

b) If there are grounds to suspect criminal activity, the investigating officer will prepare a report and will consult with the police.

Discussions with the police may result in the case progressing in one of the following ways:

c) The police wish to conduct an investigation.

In such circumstances, the councils will assist the investigation when asked. Any interviews that the police require the councils to carry out will take place under caution in accordance with the Police and Criminal Evidence Act (1984).

If the police are satisfied that it is appropriate for the councils to conduct a disciplinary investigation alongside a criminal investigation, the councils will apply the disciplinary procedure.

d) The police want the relevant council to continue with the investigation.

If so, the councils will do so in accordance with their policy on fraud investigations and with reference to the head of corporate services.

The investigating officer will continue to liaise with the police who may wish to take on the investigation at any time. If so, the councils will follow procedures as set out in c) above.

If the police believe that criminal prosecution is likely but they still want the council to handle the investigation, then the councils will carry out any interviews that the police require under caution, which is in accordance with the Police and Criminal Evidence Act (1984).

If the police are satisfied that it is appropriate for the council to conduct a disciplinary investigation alongside a criminal investigation, the councils will apply the disciplinary procedure.

e) If the police determine that there is no criminal case, then the council will continue the investigation in accordance with its own disciplinary procedures.

The investigating officer will consult with the police if any new material or evidence comes to light following which, the councils will progress in accordance with the procedures set out in paragraphs c), d) or e).

Reporting following investigation

50. On completion of the investigation, the investigating officer will submit a written report to the monitoring officer, the chief executive and the section 151 (chief finance) officer containing:

l a description of the incident, including the value of any loss

l the people involved

l details of the action taken against the people involved

l the means of perpetrating the fraud

l the measures taken to prevent a recurrence, and

l any action needed to strengthen future responses to fraud, bribery or corruption, with a follow-up report on whether the actions have been taken.

51. On an annual basis, the monitoring officer will advise the South Oxfordshire and White Horse District Councils’ Joint Audit and Governance Committee whether it has invoked the anti-fraud, bribery and corruption policy and its associated response plan during the year. The report will set out:

any quantification of losses
progress with recovery action
progress with disciplinary action
progress with criminal action

· estimate the resources required to conclude any outstanding matters and

· the actions taken to prevent and detect similar incidents.

51. This committee can request reports from the monitoring officer.

Action taken following investigation

53. Once the investigating officer has submitted the report, a council’s lead involvement in the investigation under the anti-fraud, bribery and corruption response plan is complete. Any decision the council takes will be final.

54. In the event that the investigation identifies no evidence of fraud but evidence of misconduct, the councils will pursue the matter in accordance with the councils’ disciplinary procedures.

55. Where the investigation identifies evidence of a failure of supervision contributing to the commission of the fraud, the councils may invoke the disciplinary procedure against the manager in question.

56. Should the investigation conclude that there is no evidence of fraud or misconduct, the councils will reinstate the subject (if previously suspended) and will close the case. The monitoring officer, or the section 151 (chief finance) officer if they have become responsible for the case, and the head of corporate services will decide how any reinstatement will be communicated, in consultation with the subject, and where requested his/her trade union representative.

Recovery of losses

57. The recovery of money and resources wrongfully taken from us is a key part of our integrated strategy. Loss recovery is a key driver aimed at reducing losses from fraud & corruption and reducing exposure to the risks of fraud and corruption. As such, we actively seek to recover our losses.

58. Whilst the Council has insurance cover for losses from fraud, corruption or other such acts, these are subject to excesses and specific limits. We therefore do not rely on insurance as a preferred method of loss recovery. We have a range of options available to us for recovering losses and, since the Proceeds of Crime Act 2002, these have increased. The options we consider include:

• instigating recovery of property, removing from the Housing Register, cancelling temporary accommodation and suing for loss of rent

• charges on property

• third party debt orders (‘Garnishee’ – where payment can be obtained from a third party who owes or holds money for the debtor, e.g. where a bank is ordered to pay the credit balance in a debtor’s bank account to the creditor in satisfaction of a judgement or court order)

• attachment of earnings

• freezing injunctions

• pursuing debts via legal proceedings

• confiscation orders to secure the ‘benefit’ from a person involved in criminal activity, e.g. where a person has fraudulently obtained funding for social care which they have used to pay a mortgage on a property, the amount by which the property has increased in value may be confiscated as distinct from simply the amount of overpaid funding.

• compensation

• restitution orders

• use of the National Crime Agency (NCA) for the most serious crimes.

Wherever the Council takes proceedings, criminal or civil, in respect of fraud, corruption or other financial irregularity/ malpractice it will seek to recover all its costs in doing so.

Publicity and dealing with the media

59. Whilst the councils cannot prevent members of the public approaching the press about suspected fraud, bribery or corruption, they should be aware that such action could prejudice any investigation or any subsequent disciplinary or legal action.

60. Councillors, co-optees, employees, partners and contractors should not make any public statement regarding suspected financial impropriety. This will prevent defamatory statements or statements that may prejudice any investigation or disciplinary/legal action. On being contacted by a member of the press or public, the monitoring officer should be contacted immediately.

61. The councils may optimise the publicity opportunities available to make employees and the public aware of the councils’ commitment to taking action on acts of financial impropriety. The councils may report any action taken relating to acts of financial impropriety to the press as a deterrent to other potential offenders, subject to the usual restrictions on reporting legal proceedings.

Conclusion

62. Each council commits to the development of an anti-fraud, bribery and corruption culture and will not tolerate fraud, bribery or corruption in any capacity.

63. Each council will deal with fraud, bribery or corruption promptly. Each council will investigate cases fairly, and where appropriate, prosecute the perpetrators to the fullest extent that the law allows. In certain matters, depending on the nature of the circumstances, alternative sanctions may, on agreement, be deemed to be appropriate.

64. This document seeks to state the councils’ position and intent regarding all fraud, bribery and corruption matters that may affect the councils.

Officer responsible for this response plan

65. The monitoring officer has overall responsibility for the maintenance and operation of this response plan, and they will liaise as necessary with the chief executive, the section 151 (chief finance) officer and the internal audit manager.

This policy revokes all other anti-fraud, bribery and corruption response plans.

This policy was approved by South Oxfordshire District Council’s Cabinet on

8 February 2010 and Vale of White Horse District Council’s Cabinet member on 16 March 2010.

Updated: November 2011 (version 2), February 2014 (version 3), May 2016 (version 4), November 2019 (version 5) October 2022 (version 6)by the head of legal and democratic under her delegation to make minor amendments.

Policy review date: December 2025

Additional sources of information

The following are associated policies and procedures that are referred to in this policy or can be used as additional sources of information:

Joint policies:	South Oxfordshire		Vale of White Horse District
South and Vale	District Council		Council policies
	policies
	·	Scheme of delegation	·	Scheme of delegation
	·	Service specific	·	Service specific procedure
		procedure manuals		manuals

Alternative formats of this publication are available on request. These include large print, Braille, audio, email and alternative languages.

Please contact democratic services at Council on ' 01235 422520

Appendix A

Fraud, bribery and corruption – detection and awareness

1. This appendix aims to give practical advice and information to managers who are likely to be responsible for areas where fraud, bribery and corruption may occur. It gives hints about the signs to look for to spot fraud, bribery and corruption. It also provides examples and guidance on the action to take if fraud is suspected.

Fraud/corruption areas

2. Fraud, bribery, corruption or any financial impropriety are risks wherever staff or independent contractors complete official documentation and could take advantage of the councils. The risk is enhanced where staff or contractors are in a position of trust or responsibility and are not checked or subjected to effective monitoring or validation.

3. Consequently, the following areas are particularly susceptible to fraud:

· Procurement and contracts

· Claims for services supplied

· Travel claims

· Expense claims

· Cash receipts/petty cash

· Payroll

· Ordering and payments

· Stocks and assets

4. The list is not definitive or exhaustive. The following provides more information on the above examples.

Claims for services supplied

5. This could include claiming for services not performed and/or claiming for a higher level of service than that performed.

Travel claims

6. Because of staff travelling alone, the volume of journeys and the numbers of staff claiming, it is extremely difficult for management to check and validate all the claims made. Some of the most common frauds in this area are:

· false journeys claimed

· inflated mileages

· unnecessary journeys taken

· higher reimbursement rates claimed

· two employees claiming for a journey taken together

· claiming first class travel but taking second class.

Expense claims

7. Expense claims that staff can make include subsistence, training expenses and removal expenses. The examples of fraud in this area could generally fall into the following categories:

· false and inflated claims made

· claims submitted to both councils and a third party

· excessive /inappropriate expenses claimed

Cash receipts

8. Staff can collect cash in a variety of situations. It is a high-risk area. The main problems are:

· accepting cash without a receipt or declaring it

· altering documentation to disguise the theft of cash

· ‘teeming and lading’, e.g. substituting cheques received, but not recorded, for cash received.

Petty cash

9. Petty cash is usually held in a limited number of authorised locations at specified levels. The following problems can arise:

· reimbursement sought for receipted, but inappropriate expenditure

· vouchers/receipts submitted but no expenditure made.

Payroll

10. The major payroll frauds are most likely to occur with respect to starters and leavers. However, other fraud areas may be:

· erroneous or ‘ghost’ employees introduced onto the payroll, the salary being paid to the perpetrator

· a leaver not being taken off the payroll and the salary payment being diverted to the perpetrator

· hours worked over-stated to take advantage of flexi-time or overtime arrangements.

Ordering and payments

11. This is an area that is open to corruption as well as fraud. The number of employees able to commit an offence in this area is more limited than in some of the above examples. However, suppliers can also commit fraud such as:

· goods ordered for personal use or from a specific supplier in return for some form of benefit

· goods ordered from a relative or friend’s business

· accepting a lower number of items than ordered, but certifying an invoice for a higher number

· creating/certifying false invoices and payment requisitions, for which no order has been raised

Stocks and assets

12. Misuse, theft, and fraud in this area are not unknown. The most obvious and common risk area is stationery. However, employees need a variety of stocks and assets, which if not properly controlled, may be subject to losses due to fraud and theft.

13. A further problem is the use of the councils’ assets for an individual’s personal reasons, e.g., using a personal computer, fax or telephone for running a private business or for other private purposes.

14. The above examples do not represent a comprehensive list of potential frauds.

Fraud awareness

15. All managers should ensure that controls are in place to prevent and detect fraud and error. The types of controls available to managers set out in appendix B.

16. Fraud involves the falsification of records. Therefore managers need to be aware of the possibility of fraud when reviewing or being presented with claims/forms/ documentation. Issues, which may give rise to suspicion, are:

· documents that have been altered, use of Tippex, or use of different pens and different handwriting

· claims that cannot be checked, particularly if prior authorisation was not given

· strange trends (use comparisons and reasonableness)

· confused, illegible text and missing details

· delays in documentation completion or submission

· no vouchers or receipts to support claims.

17. A sense that a certain team is not performing as expected may possibly warn of potential fraud. Often these feelings are ignored and it is only with hindsight that cause for concern is realised.

18. An important step towards eliminating fraud is making sure individuals act on such warning signs. These warning signs fall into two categories: a) warning signs of a temporary increased risk of fraud, b) fraud alerts. More information is set out below.

Warning signs of a temporary increased risk of fraud

l Autocratic line management

19. A forceful person exerting authority and influence exceeding his or her status. Controls may be over-ridden or unfavourable information suppressed, conditions essential to the concealment of many frauds.

l Low morale

20. Unhappy employees are less likely to operate controls effectively and may cut corners.

l High staff turnover

21. High staff turnover may indicate anxiety at fraudulent activity or the way the work is managed as well as a reluctance to continue working under such conditions. It also may prevent fraud being detected due to inexperience/lack of knowledge.

l Undue emphasis on reaching short-term targets

22. Where management becomes so concerned with reaching operational targets this can become the over-riding aim at the expense of risk of fraud, i.e. shortcuts leading to lapses in control.

l Remote locations

23. Fraud is more likely to happen where supervision and control is least effective. Those at remote sites based away from central management may be able to abuse their controls if not regularly monitored and visited.

Fraud alerts

24. Fraudsters sometimes test a fraud by making several small or inconsequential attempts before a single large transaction. Detection of small frauds may be a sign of large-scale fraud activity. It is therefore vital to react quickly and effectively to fraud alerts.

l Anonymous letters

25. Anonymous letters received by the councils may be malicious and unsubstantiated, but they must always be followed up.

l Lifestyle

26. Any obvious discrepancy between earnings and lifestyle could be a cause of concern. A sudden improvement in personal circumstances should be discreetly questioned. Usually there will be a good reason.

l Not taking annual leave

27. Concealing fraud is not easy. Workaholics and staff who do not take their leave entitlement may be trying to avoid the risk that staff might spot something suspicious.

l Lack of separation of duties

28. An employee solely responsible for a ‘risk’ area and/or possible refusal to allow another employee to be involved in their duties.

l Unusual, irrational or inconsistent behaviour

29. Anything that is surprising about the behaviour of individuals deserves further enquiry, e.g. stress, financial pressure (possibly caused by drinking/gambling/ over-extension of credit).

30. Fraud alerts such as these should always be investigated promptly. Enquiries should be discreet and fair as there are probably innocent explanations. However, fraudsters are experts at giving convincing explanations. Therefore, any investigation must be thorough and extensive enough to ensure that no concern remains.

31. There may be instances where local knowledge leads to suspicions regarding the behaviour of contractors. These could, for example, emanate from complaints from members of the public, or discussions with other contractors.

Appendix B

Prevention – action and controls

1. Whilst it is impossible to create a 100 per cent fraud proof system, heads of service must ensure that the systems they operate include reasonably effective controls designed to detect and prevent fraud and error.

2. The actions and controls that managers should take/consider include:

· documenting procedures and controls and training all staff in their use ensuring staff are aware and trained in council wide procedures and they check compliance with the procedures

· separating duties between staff and considering staff rotation to avoid a single employee having sole responsibility for the initiation through to the completion of a transaction

· introducing adequate ‘internal checks’.

This involves an independent employee checking the work, calculations, or documentation prepared by the initiating employee. For example, a travel claim could be checked by a manager to original work records or diaries.

· ensuring expenses are supported by appropriate original receipts

· ensuring the prior documented approval of expense generating courses or visits

· crossing out the uncompleted part of a claim form, thereby making the addition of further expenses difficult after approval

· minimising cash/stock holdings and banking cash and cheques on a daily basis

· reviewing budget statements and other management information

· following up variances using

o trend analysis

o increased monitoring of high risk areas.

3. Heads of service can always seek guidance from internal audit.

· Local code of	Code of governance
governance