Agenda item

Anti-fraud, bribery and corruption policy

 

Introduction

 

1.          This is a joint policy adopted by South Oxfordshire District Council and Vale of White Horse District Council. The policy aims to provide guidance on how to raise concerns about fraud, bribery or corruption within the councils.

 

2.          In carrying out their functions and responsibilities, the councils wish to promote a culture of openness and fairness and expect all those who work for and with the councils to adopt the highest standards of propriety and accountability.

 

3.          Following the publication of the Nolan Report in 1997, the Local Government Act 2000, and several well publicised cases concerning fraud and corruption within local government, the councils recognise the need for a policy to prevent wrongdoings.

 

Who this policy applies to

 

4.          This policy aims to help employees (including temporary and agency staff), to understand when, how and who to contact when they have concerns about fraud, bribery or corruption. Employees must ensure they adhere to legal and contractual requirements and ensure that all procedures and practices remain above reproach.

 

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 under this policy, should refer to the councils’ whistleblowing policy for guidance.

 

5.          This policy also aims to help councillors, co-optees on the councils’ committees, partners, contractors, suppliers, voluntary organisations, and members of the public to understand how and when to contact the relevant council with their concerns.

 

Links to strategic objectives

 

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

 

Aims and scope of this policy

 

7.          The councils agree that in having committees agree this policy:

·       it sets the standard at a sufficiently high level that makes it clear that fraud, bribery or corruption will not be tolerated

·       that the councils are committed to preventing and detecting fraud, bribery or corruption

·       that those perpetrating fraud, bribery or corruption will be prosecuted.

8.          The councils acknowledge that the vast majority of their employees and those that work with them act with honesty and integrity at all times to safeguard the public resources they are responsible for. However, there are people who will not act in this way.

 

9.          The councils will not accept any level of fraud, bribery or corruption. Consequently, all cases identified will be thoroughly investigated and dealt with appropriately.

 

10.      The councils will undertake investigative activity regardless of the suspect’s length of service, position/title, or relationship to the council.

 

Definitions

 

FRAUD

 

11.      According to the Fraud Act 2006, fraud can be committed in the following three ways:

 

FRAUD BY FALSE REPRESENTATION: “representation” means any representation as to fact or law and may be express or implied. A person commits an offence when they dishonestly make a false representation, and intends, by making the representation to:

·       make a gain for himself or another, or

·       cause loss to another person or

·       to expose another to a risk of loss.

 

A representation is false if:

·                it is untrue or misleading, and

·                the person making it knows that it is, or might be, untrue or misleading.

 

FRAUD BY FAILING TO DISCLOSE INFORMATION: an offence is committed where a person dishonestly fails to disclose to another person information, which he is under a legal duty to disclose, and intends, by failing to disclose the information to:

·                make a gain for himself or another, or

·                cause loss to another or to expose another to a risk of loss.

 

FRAUD BY ABUSE OF POSITION: an offence is committed where a person occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person, dishonestly abuses that position, and intends, by means of the abuse of that position to:

·                make a gain for himself or another, or

·                cause loss to another or to expose another to a risk of loss.

In addition the Act introduces new offences in relation to obtaining services dishonestly, possessing, making and supplying articles for use in frauds

 

The term fraud is used to describe such acts as deception, bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement, misappropriation, false representation, concealment of material facts and collusions.

 

12.      This policy therefore covers all financial impropriety including theft or corruption, which are described in more detail below:

·       According to the 1968 Theft Act ‘a person shall be guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it’.

·       Corruption is the offering, giving, soliciting or acceptance of an inducement or reward that may influence the actions taken by the audited body, its members or employees.

·       Money Laundering is the process by which criminals attempt to “recycle” the proceeds of their criminal activity in order to conceal its origins. The burden of identifying and reporting acts of money laundering rests with the councils. Any service that receives money from an external source is potentially vulnerable. The Anti-Money Laundering Policy contains more detail.  The Money Laundering Reporting Officer (MLRO) is the Sect. 151 Officer. 

 

ACTIONS CONSTITUTING FRAUD OR CORRUPTION

 

13.      Actions constituting fraud or corruption may include, but are not limited to:

·       any dishonest or fraudulent act against a council

·       forgery or alteration of any document or account belonging to a council

·       forgery or alteration of a cheque, bank draft or any other financial document

·       misappropriation of funds, securities, supplies, or other assets

·       impropriety in the handling or reporting of money or financial transactions

·       profiteering as a result of insider knowledge of council activities

·       disclosing confidential and proprietary information to outside parties

·       destruction, removal or inappropriate use of records, furniture, fixtures and equipment

·       failure to declare an interest.

 

14.      Areas particularly susceptible to fraud, bribery or corruption are set out below with examples of fraudulent activity (the list is not exhaustive). Appendices A and B of the anti-fraud, bribery or corruption response plan contain hints and signs to look out for that indicate that fraud or corruption may exist. 

 

Area	Example of fraudulent activity
Contracts	Collusion with others during the tendering process
Council tax	People claiming single person discount when they are not entitled to
Recruitment fraud	Fictitious work history and/or references
Abuse of position	Falsification of records to cover up fraudulent activity such as stolen cash
Travel claims	False journeys claimed, inflated mileage or two employees claiming for a journey taken together
Expense claims	Claims submitted to the council(s) and/or a third party
Cash receipts/ petty cash	Accepting cash without receipting it or reimbursement sought for receipted but inappropriate expenditure
Payroll	Hours worked over-stated to take advantage of overtime for financial gain
Ordering and payments	Goods ordered for personal use Goods ordered from a specific supplier in return for some form of benefit
Stocks and assets	Unauthorised use of stationery Using council assets for personal use such as running a private business
Timesheets	Falsifying hours worked Claiming to be sick but carrying out paid work elsewhere

 

BRIBERY

 

16.      The Bribery Act 2010 was introduced to update and enhance UK law on bribery including foreign bribery. Notably, it introduces a new strict liability offence for companies and partnerships of failing to prevent bribery. The introduction of this new corporate criminal offence places a burden of proof on local authorities to show they have adequate procedures in place to prevent bribery. The councils could be guilty of an offence if an ‘associated person’ carries out an act of bribery in connection with its business. A person will be ‘associated’ with the councils where that person performs services for or on behalf of the councils. The Bribery Act also provides for strict penalties for active and passive bribery by individuals as well as companies.

 

17.      The Bribery Act creates four prime offences:

·       two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting an advantage;

·       a discrete offence of bribery of a foreign public official; and

·       a new offence of facility by a commercial organisation to prevent a bribe being paid to obtain or retain business or a business advantage (should an offence be committed, it will be a defence that the organisation has adequate procedures in place to prevent bribery).

 

18.      Bribery can be described as the receiving of an inducement for an action which is illegal, unethical or in breach of trust. Inducements can take the form of gifts, fees, rewards or other advantages.

 

Identifying the risk of fraud, bribery or corruption and risk mitigation

 

19.      In having a risk management strategy, which includes risk mitigation measures, the councils aim to detect fraud, bribery or corruption and deter potential perpetrators of such activity.

 

20.      This policy and its associated anti-fraud, bribery and corruption response plan set out exactly what steps to take on suspecting fraud, bribery or corruption.

 

21.      In having a continuous programme of fraud, bribery or corruption awareness and regular updates and training for new and existing staff the councils aim to mitigate the risk of fraud, bribery or corruption taking place.

 

22.      In referring to this policy in its quotation/tender documents with suppliers and its procurement guide, the councils aim to mitigate the risk of fraud, bribery or corruption taking place.

 

Avenues for reporting suspicious activity

 

23.      The councils have in place a number of ways of reporting suspicions of fraud, bribery or corruption.

 

24.      Non-employees of either council can use the council’s complaints process, or the complaints process relating to the councillors’ code of conduct.

 

25.      In relation to employees, the relevant council will deal with matters in confidence and in accordance with the terms of their joint whistleblowing policy and the Public Interest Disclosure Act 1998.

 

Responsibilities

 

26.      The primary responsibility for the prevention, detection and investigation of fraud, bribery or corruption rests with senior management, who are also responsible for managing the risk of fraud, bribery or corruption. The purpose of this policy is to set out more specific responsibilities for its prevention.

 

REPORTING FRAUD, BRIBERY OR CORRUPTION

 

27.      In accordance with the councils’ financial procedure rules in the councils’ constitutions, “Any relevant person …shall notify the chief finance officer or internal audit manager immediately of any financial or accounting irregularity, or suspected irregularity, or of any circumstances which may suggest the possibility of such loss or irregularity, including those affecting cash, stores, property, remuneration or allowances.”.

 

RECEIVING REPORTS AND PREVENTING FRAUD, BRIBERY OR CORRUPTION

 

28.      The following paragraphs set out more specifically the roles and responsibilities of those receiving reports of fraud, bribery or corruption and their roles and responsibilities in preventing wrongdoings arising in the first place.

 

29.      The anti-fraud, bribery corruption response plan provides further information on who should take what action on discovering a potential fraud, bribery or corruption.

 

MONITORING OFFICER

 

30.      The monitoring officer has responsibility for:

·      ensuring that this policy is current

·      initiating action if fraud, bribery or corruption may have been identified

·      the lawfulness and fairness of decision making

·      ensuring that councillors are aware of the protocols, policies and procedures, as set out at the end of this policy that apply when carrying out their duties.

 

SECTION 151 (CHIEF FINANCE) OFFICER

 

31.      The section 151 (chief finance) officer has responsibility for:

·       the proper administration of the councils’ financial affairs under s.151 of the Local Government Act 1972 and s.114 of the Local Government Finance Act 1988. This includes the employee nominated by him/her to act in his/her absence and any employee of his/her staff acting on his/her behalf.

·       reporting to councillors and the Audit Commission if either council, or one of its representatives makes, or is about to make a decision which is unlawful, or involves illegal expenditure or potential financial loss (Local Government Finance Act 1988 s.114).

·       investigations arising from allegations raised under the whistleblowing policy when the chief executive, internal audit manager and monitoring officer agree with the section 151 (chief finance) officer that he/she will take on the responsibility.

 

HUMAN RESOURCES

 

32.      Human Resources is responsible for ensuring that new employees, during induction, are aware of their contractual obligations in relation to anti-fraud, bribery or corruption as well as this policy, the associated response plan and their links with the whistleblowing policy.

 

MANAGERS

 

33.      Managers are responsible for:

·       maintaining internal control systems and communicating them to their staff

·       ensuring that the councils’ resources and activities are properly applied in the manner intended

·       identifying the risks to which systems and procedures are exposed

·       developing and maintaining effective controls to prevent and detect fraud, bribery and/or corruption

·       ensuring that controls are being complied with

·       implementing audit recommendations promptly

·       responding to reports of possible financial impropriety in accordance with the whistleblowing policy.

 

INDIVIDUAL EMPLOYEES

 

34.      All employees should take seriously and treat with confidence any concerns raised about a potential fraud, bribery or corruption. The councils encourage reporting of suspicions and will protect those who do so (even if the suspicions are unfounded but made with good intent), as set out in the councils’ whistleblowing policy.

 

35.      The councils expect employees to follow any code of conduct relating to their personal professional qualifications and abide by the relevant councils’ code of conduct for their staff.

 

36.      Employees must operate within Section 117 of the Local Government Act 1972, to give notice in writing of pecuniary (financial) interests in contracts relating to their council or the offer of any fees or rewards other than their proper remuneration.

 

37.      All employees must declare any offers of gifts or hospitality, which are in any way related to the performance of their council duties. The councils’ guidance on gifts and hospitality provides more information.

 

38.      Employees should not undertake work or activities outside their direct employment with either council if their council duties overlap in some way with their proposed work or activity, e.g. by causing a conflict of interest or by making use of material to which they have access by virtue of their council employment.

 

39.      Any employee wishing to undertake other employment should check with their manager whether they need permission from their head of service to do this and whether they should register the employment on an annual basis. If the employee needs permission the head of service should send copies of correspondence, including permission, to human resources who will record it.

 

40.      The councils encourage all staff to make voluntary declarations for all secondary employment based on the need for open government.

 

41.      As well as employment contract obligations, each employee is responsible for:

·       remaining aware of the policies and procedures set out at the end of this policy

·       their own conduct and contribution towards the safeguarding of council standards in accordance with the policies and procedures set out at the end of this policy

·       acting with propriety when using council resources, when handling council funds, whether they are involved with cash or payments systems, receipts or dealing with contractors or suppliers and

·       reporting details immediately to their line manager or the most appropriate employee if they suspect that fraud, bribery or corruption has been committed or they have seen any suspicious acts or events.

 

INTERNAL AUDIT

 

42.      Internal audit has responsibility for:

·       the independent appraisal of control systems

·       assisting in the investigation of irregularities.

 

COUNCILLORS AND CO-OPTED MEMBERS OF THE COUNCILS’ COMMITTEES

 

43.      All councillors and co-optees should take seriously and treat with confidence any concerns raised about a potential fraud, bribery or corruption. The councils encourage reporting of suspicions and aim to protect those who do so (even if the suspicions are unfounded but made in good faith).

 

44.      Councillors and co-optees must ensure that they avoid any situation where there is potential for a conflict of interest.

 

45.      Each councillor or co-optee of the councils is responsible for:

·       observing standards, set out in the councillors code of conduct

·       familiarising themselves with the codes, protocols, policies and procedures as set out at the end of this document.

 

THE EXTERNAL AUDITOR

 

46.      The external auditor has responsibility for:

·       reviewing the stewardship of public money by the councils and

·       considering whether the councils have adequate arrangements in place to prevent fraud, bribery or corruption.

 

THE CABINET OFFICE

 

47.      The Cabinet Office has responsibility nationally for the biennial National Fraud Initiative (NFI).  Under Section 6 of the Audit Commission Act 1998, the Cabinet Office (previously the Audit Commission) requires all councils to provide employees’ (including councillors’) payroll data to enable data matching to take place with the aim of preventing and detecting fraudulent and erroneous payments from the public purse. The councils participate in this.

 

BENEFIT FRAUD TEAM

 

48.      The councils’ benefit fraud team carries out activities to prevent and detect benefit fraud.

 

THE ROLES OF THE COMMITTEES

 

49.      South Oxfordshire and Vale of White Horse District Councils’ Joint Audit and Governance Committee has responsibility for:

·       risk management issues and making any recommendations thereon

·       the overview of the councils’ whistleblowing policy

·       the overview of the councils’ anti-fraud, bribery or corruption arrangements

·       matters relating to the councillors’ code of conduct that the Monitoring Officer refers to them.

 

THE POLICE

 

50.      The police may:

·       investigate links to offences

·       give prevention advice

·       advise on any pre-investigation work

·       maintain a dialogue with management and/or internal audit during an investigation.

 

Prevention of fraud, bribery or corruption

 

REGULATORY FRAMEWORK

 

51.      The councils have a wide range of mechanisms in place aimed at preventing and detecting fraud, bribery or corruption. These include the legislation set out in this document in addition to each council’s financial procedure rules or regulations.

 

52.      Managers must ensure that adequate levels of internal checks are included in working procedures, particularly financial procedures. It is important that duties are organised in such a way that no one person can carry out a complete transaction without some form of checking or intervention process being built into the system.

 

 

STAFF SELECTION/SCREENING

 

53.      The councils’ recruitment procedures ensure that the councils appoint employees on merit and prevent the appointment of unsuitable people.

 

54.      Applicants complete an application form and must declare any criminal convictions that are not spent. Where appropriate, applicants may also be subject to a Disclosure and Barring Service (DBS) police check.

 

55.      The councils appoint employees subject to satisfactory written references.

 

56.      The councils conduct documentary checks on all new employees to ascertain their eligibility to employment in accordance with the Asylum & Immigration Act 1996 s.8 (as amended) effective 1 May 2004.

 

CONTRACTORS AND THOSE DELIVERING SERVICES FOR THE COUNCILS

 

57.      Each council will ensure that all contracts conform to the highest standards possible. The councils will act to ensure that those organisations that work with the councils to deliver services are made aware of the councils’ strong anti-fraud, bribery and corruption principles, including their whistleblowing policy.

 

58.      Where appropriate the councils may exclude suppliers, contractors and service providers from public contracts following conviction for certain offences including participation in criminal organisations, fraud, corruption, bribery or money laundering.

 

59.      The councils will seek an assurance that those tendering to provide supplies, goods, services and works to the councils have adequate anti-fraud, bribery or corruption recruitment procedures and controls in place; have not colluded with others during the tendering process; or canvassed or solicited any councillor or employee of either council in connection with the award or future award of contracts.

 

60.      In awarding any contract, the councils will act in accordance with their procurement procedure rules. Within its contract terms, the councils may exercise a right to terminate a contract and recover losses if there is evidence of fraud, bribery or corruption in connection within a council contract by the contractor, its employees or anyone acting on the contractor’s behalf.

 

61.      The councils may seek the strongest available sanctions against the contractor, their employees or anyone acting on behalf of the contractor who commits fraud, bribery or corruption against the councils and will request that the organisation concerned takes appropriate action against any individual concerned.

 

62.      Where contractors are involved with the administration of council finances, or those for which the councils have responsibility, the councils will conduct internal audit reviews and pro-active anti-fraud, bribery or corruption exercises as part of the contract management process.

 

 

 

COLLABORATION WITH OUTSIDE AGENCIES AND OTHER BODIES

 

63.      Given the nature of a council’s work, the nature and scope of fraud, bribery or corruption can vary and involve different bodies. Therefore, the councils may need to liaise with and undertake joint working with certain agencies, including (but not limited to):

·       other local authorities

·       benefits agencies

·       the Serious Fraud Office (SCD6, formerly SO6)

·       the local police

·       the Home Office

·       the UK Border Agency

 

64.      The councils commit to working and co-operating with other organisations to prevent organised fraud, bribery or corruption. Wherever possible, the councils will assist and exchange information with other appropriate bodies to investigate and combat fraud, bribery and corruption.

 

Detection and investigation

 

65.      The range of preventative systems within the councils, particularly internal control systems, can provide indicators of fraud, bribery or corruption (and error) and can help to detect any inappropriate activity.

 

66.      Senior managers have responsibility for preventing and detecting fraud, bribery or corruption. Often, the alertness of others enables the detection of wrongdoings and appropriate action to take place when evidence suggests that fraud, bribery or corruption may be taking place.

 

67.      Despite the best efforts of managers and auditors, many irregularities are discovered by chance. The councils have arrangements in place to deal with such discoveries. The anti-fraud, bribery and corruption response plan sets out the councils’ arrangements. Some frauds may be discovered as a result of whistleblowing.

 

WHISTLEBLOWING

 

68.      The councils’ whistleblowing policy encourages people to raise serious concerns. Employees reporting concerns are afforded certain rights and protection through legislation enacted under the Public Interest Disclosure Act 1998.

 

69.      The councils will support employees who report concerns and will make every effort to protect them from reprisals. The councils will do everything possible to protect their confidentiality.

 

OTHER SUSPECTED FRAUD, BRIBERY CORRUPTION OR IRREGULARITY

 

70.      As referred to in paragraph 27, a duty exists to report any suspected cases of fraud, bribery or corruption. Reporting cases in accordance with this policy and the whistleblowing policy is essential and:

·       ensures the consistent treatment of information regarding fraud, bribery or corruption

·       facilitates the proper investigation of suspected cases and

·       protects the interests of individuals and the councils.

 

71.      This process will apply to allegations of fraud, bribery or corruption relating to the following areas:

·       by councillors or co-optees

·       internal fraud and other fraud, bribery or corruption by council employees acting in a personal capacity

·       by contractors or their employees and

·       external fraud, bribery or corruption (the public)

 

72.      The anti-fraud, bribery and corruption response plan gives more guidance.

 

73.      The external auditor also has powers to independently investigate fraud, bribery or corruption.

 

CONFIDENTIALITY

 

74.      The councils will treat all information received confidentially. The councils will not disclose or discuss investigation results with anyone other than those who have a legitimate need to know. This is important in order to avoid damaging the reputations of people suspected but subsequently found innocent of wrongful conduct and to protect the councils from potential civil liability. Any processing of personal data will comply with the Data Protection Act and the data protection principles.

 

PUBLICITY

 

75.      The councils’ communications team may use the press to report the outcome of any action taken, including prosecutions.

 

76.      The councils will publish this policy and any review of it to make employees, councillors, co-optees, contractors, partners and the public aware of the councils’ commitment to taking action on fraud, bribery or corruption when it occurs.

 

Courses of action

 

77.      Mechanisms exist within the councils to act in cases of fraud, bribery or corruption. These include the following:

 

DISCIPLINARY ACTION

 

78.      Gross misconduct and other fraudulent or corrupt conduct will normally lead to dismissal. The councils’ disciplinary procedure provides further information.

 

PROSECUTION

 

79.      The councils will seek full redress through the legal processes available to counter any internal or external fraudulent activities perpetrated against it. This redress will be achieved through criminal and/or civil courts as considered appropriate.

 

80.      The chief executive, in consultation with the section 151 (chief finance) officer, the monitoring officer, human resources, the internal audit manager and other external agencies as appropriate, will decide whether to refer the case to the police for prosecution. Other external agencies involved may include the Department for Works and Pensions and the Crown Prosecution Service.

 

81.      The councils will take all reasonable action to recover any money or goods.

 

CONSEQUENCES OF FAILURE TO COMPLY WITH THE BRIBERY ACT 2010

 

82.      Failure to comply with the Bribery Act 2010 could result in imprisonment of up to 10 years and/or unlimited fines without taking into account the severe reputational repercussions for the councils.

 

83.      A statutory defence to the strict liability offence of ‘failing to prevent bribery’ is the introduction of internal adequate procedures. For the councils this includes:

·      the appointment of the councils’ monitoring officer to deal with all matters relating to bribery and corruption;

·      management commitment to a zero tolerance culture to bribery and corruption. The councils will not accept any level of corruption, and all cases identified will be thoroughly investigation and dealt with appropriately;

·      accessible and enforceable policies and procedures;

·      a regulatory framework aimed at preventing and detecting corruption, and

·      relevant staff are trained on how to spot and prevent potential bribery.

 

84.      Failure to comply with, or breach of, any sections contained within this policy could be regarded by the councils as gross misconduct. This will be dealt with in accordance with the councils’ disciplinary procedures.

 

Awareness and training

 

85.      Introducing and implementing a successful anti-fraud, bribery or corruption policy is dependent largely on the awareness and responsiveness of those working in and with the councils.

 

86.      The councils will make councillors, co-optees and employees aware of this policy initially via the induction process and will remind them of this policy via council publications.

 

87.      The councils support the concept of fraud, bribery or corruption awareness training for councillors, co-optees and employees to ensure that their responsibilities and duties in respect of anti-fraud, bribery and corruption are current and their understanding reinforced.

 

88.      The councils also commit to training and developing staff who are involved in investigating fraud, bribery or corruption and will provide suitable training where necessary.

 

89.      The councils will act to ensure that those organisations that work with the councils to deliver services are made aware of the councils’ strong anti-fraud, bribery or corruption principles, including their whistleblowing policy.

 

Monitoring of this policy

 

90.      The monitoring officer will decide when this policy needs review in light of any change of legislation or council policy if this is before the scheduled review date.

 

91.      The Joint Audit and Governance Committee. The monitoring officer, in consultation with the chief executive, the section 151 (chief finance) officer, and the co-chairmen of the Joint Audit and Governance Committee will ensure that any corrective actions identified from investigations are brought to the attention of the relevant committee.

 

Conclusion

 

92.      The councils commit to the development of an anti-fraud, bribery and corruption culture and will not tolerate fraud, bribery or corruption.

 

93.      Fraud, bribery or corruption, where it is detected, will be dealt with promptly, investigated fairly, and where appropriate, prosecuted 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 appropriate.

 

94.    This document seeks to state the positions of South Oxfordshire District Council and Vale of White Horse District Council and each council’s intent regarding all fraud, bribery or corruption matters that may affect either council.

 

 

Officer responsible for this policy

 

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

 

 

 

This policy revokes previous versions of the anti-fraud, bribery or corruption policy.

 

This policy was originally approved by South Oxfordshire District Council’s Cabinet on 8 February 2010 and Vale’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 delegated powers to make minor amendments.

 

Policy review date: November 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 policies	Vale of White Horse policies
Anti-fraud and corruption policy and response plan
	Budget and policy framework procedure rules	Budget and policy framework procedure rules
Code of Conduct for members and associated complaints’ procedure
	Complaints’ procedure	How to comment, complain and make a suggestion
Procurement Procedure Rules
	Members’ Allowances Scheme	Members’ Allowances Scheme
Dignity at Work Policy
Disciplinary Procedure (for employees)
Employee Conduct Policy Financial Procedure Rules
Gifts and Hospitality Guidance for Officers
Grievance Procedure for Employees
	Local Code of Governance	Code of Governance
Anti-Money Laundering Policy
Planning Code of Good Practice for Councillors
	Protocol on councillor/officer Relations	Member/Officer Relations
Safeguarding Children and Vulnerable Adults Policy
Scheme of Delegation
	Service Specific Procedure Manuals	Service Specific Procedure Manuals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

7.      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.

 

8.      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).

 

15. 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).

 

16. 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

 

·      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:

 

·        the chief executive,

 

·        a headof service,

 

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

 

·        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 theinternal 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. Thismay require the suspension of a suspected employee. The head ofcorporate services will advise on the appropriate means to suspend anindividual.

 

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 ofcorporate 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 theinternal 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 theinternal 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 theinternal 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 ofcorporate 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.

 

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

 

46.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 ofcorporate 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 ofcorporate 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.

 

50. 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 ofcorporate services will decide how any reinstatement will becommunicated, 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 theinternal 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

 

·   Anti-fraud and corruption

 

policy

 

·   Budget and policy

 

framework procedure

rules

·   Budget and policy

 

framework procedure

rules

 

Code of conduct for councillors

 

and its associated complaints

 

procedure

 

·  Complaints policy

 

and procedure

·How to make a comment, complaints and suggestion

 ·    Procurement procedure rules

·   Councillors’

 

allowances scheme

·   Councillors’

 

allowances scheme

 ·    Dignity at work policy

 

·     Disciplinary procedure (for employees)

·     Employee conduct policy

·     Financial procedure rules

 

·     Gifts and hospitality: guidance for officers

 

·     Grievance procedures (for employees)

 

·  Local code of	Code of governance
governance

 

·     Anti-Money laundering policy

 

·   Planning code of

 

good practice for

councillors

 

·   Protocol on

 

councillor/ employee

 

relations

·   Member/officer relations

 

·     Safeguarding children and vulnerable adults policy

 

 

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.