HomeMapByelawsGeneralContactConsentsLinksBoard Members Policies ..

Fraud and Corruption Policy

1. Introduction
2. Policy
3. Definitions
4. Discovery of Financial Irregularities
5. Responsibility of Employees
6. Responsibilities of Managers
7. Response Plan
8. Involving the Police

Introduction

One of the basic principles of public sector organisations is the proper use of public funds. It is therefore important that all those working in the public sector are aware of the risk of wrongdoing and the means of enforcing the rules against it. The aim of this document is to set out a policy and response plan for the organisation for suspected or detected irregularities.

Back to the Top

Policy

The Board is committed to a culture of honesty, openness and fairness. It is therefore also committed to the elimination of any fraud and corruption and to the rigorous investigation of any such cases and the punishment of those involved.

The Board actively encourages anyone having reasonable suspicion of irregularities to report them. It is also the policy of the Board that no employee should suffer as a result of reporting reasonably held suspicions.

The Board will always seek to recover fully all losses from those responsible in proven cases of fraud or corruption including all costs incurred in the pursuit of action against them.

Back to the Top

Definitions

There is no offence in law of Fraud but the term encompasses criminal offences involving the use of deception to obtain some benefit or to be to the detriment of some person or organisation.

Corruption, in its broadest sense, involves the taking of decisions for inappropriate reasons - e.g. awarding a contract to a friend, appointing employees for personal reasons, or the giving or accepting of gifts as an inducement to take some course of action on behalf of the organisation.

The Audit Commission defines Fraud as - “the intentional distortion of financial statements or other records by persons internal or external to the authority which is carried out to conceal the misappropriation of assets or otherwise for gain”.

Corruption is defined by the Commission as - “the offering, giving, soliciting or acceptance of an inducement or reward which may influence the action of any person”.

Back to the Top

Discovery of Financial Irregularities

Financial irregularities can come to light in a number of ways. They are usually discovered as a result of: -

1. Manual & Craft employees or Office Staff becoming aware of or suspecting that management controls are not being complied with
2. Routine work, or Audit testing
3. Information (tip-off) from a third party, internal or external to the organisation.

Any allegation, but particularly an anonymous one, should be treated with caution and discretion, because what appears to be suspicious circumstances may have a reasonable explanation. There is also a risk that some reports may be malicious.

Under no circumstances should information about any suspected irregularity, be passed to a third party or to the media without the express authority of the Clerk and Engineer or Internal Auditor.

Back to the Top

Responsibility of Employees

Employees who are aware of, or suspect that a financial irregularity is taking place, or has taken place, have a duty to report their suspicions, since by doing nothing they may be implicating themselves. Employees who may feel uncomfortable referring suspicions to line managers are encouraged to contact a senior Board Member or the Internal Auditor. If these reporting lines are unacceptable to an employee, an alternative is available in the Board’s “Whistleblowing Confidential Reporting Code”.

If an employee suspects that a financial irregularity of any type has occurred or is in progress, they should immediately inform their line manager. The only exception to this rule is where the employee suspects that the line manager might be involved in the irregularity. In that event, the employee should advise the Clerk and Engineer, Internal Auditor or a Senior Board Member.

Employees must not attempt to investigate suspected irregularities themselves, or discuss their suspicions other than with more senior managers in accordance with the guidance above.

Examples of the types of financial irregularity that might be suspected are: -

1. Theft or abuse of Board property or funds
2. Deception or falsification of records (e.g. fraudulent time or expense claims)

Back to the Top

Responsibilities of Managers

It is Management’s responsibility to maintain system controls to ensure that the Board’s resources are properly applied in the manner, on the activities, and within the limits approved. This includes responsibility for the prevention and detection of fraud and other irregularities.

Where a manager receives a report from an employee or other party of a suspected financial irregularity, they should immediately inform the Clerk and Engineer, who in turn will notify the duly appointed Internal Auditor.

Line Managers should not themselves attempt to undertake any detailed investigation of the possible irregularity and should not discuss their suspicions or those reported to them, other than with the Chief Executive and the Internal Auditor.

In cases of suspected irregularities, it is often necessary to suspend a suspect from duty. Before an employee is suspended, advice should be sought from the Clerk and Engineer. The purpose of suspension is to prevent any suggestion of a suspect having the opportunity to continue with the act complained of, falsify or destroy records, influence witnesses, etc. Suspension is not a punishment nor does it imply any fault or guilt on the part of the employee concerned.

Back to the Top

Response Plan

Upon receiving a report of suspected financial irregularity, the Internal Auditor will launch an investigation and a record will be made in the Board’s Fraud Log. The Log will record all reported suspicions including those dismissed as unsubstantiated, minor or otherwise not investigated. It will also contain details of actions taken and conclusions reached. Significant matters will be reported to the Board and the Chairman will be updated on the situation.

The Internal Auditor will confer with the Clerk and Engineer to agree the action plan to be adopted in the light of the particular circumstances.

When a prima facie case of fraud or corruption has been established, the following procedure will apply regarding referral to the Police: -

1. Minor cases of Misappropriation of Cash, etc.

   In minor cases of suspected fraud and/or cash misappropriation by employees, as soon as reasonable evidence has been acquired and speedy action is considered imperative in order to prove fraud, the Internal Auditor may call in the Police without reference to other officers. He will however advise the Clerk and Engineer as soon as practicable afterwards.

2. Major and More Complex Frauds:

   The Internal Auditor will discuss the case with the Clerk and Engineer, and consultation with the Police will normally be approved.

   Depending upon Police advice, the case will be reviewed by the above officers who will decide if it should be referred officially to the Police for investigation. If it is decided to do so the Clerk and Engineer will authorise the official complaint and notify the Chairman of the Board.

   Following the official report to the Police, any further investigations by the Internal Auditor that are considered necessary, will be planned and executed in close co-operation with the Police, with the Clerk and Engineer and Chairman of the Board being kept informed.

The circumstances of the particular case will dictate when the Police and external auditors are informed, but it is recommended that the Police should be informed when: -

1. There is evidence of an irregularity which needs to be confirmed by witness interview if criminal prosecution is contemplated;
2. Interview of the suspect is desirable to confirm the evidence of records;
3. A prima facie case of fraud has been established but the perpetrator could not be identified.

Back to the Top

Involving the Police

Internal Auditors and Chief Officers may be reluctant to involve the Police in the belief that: -

1. They are only interested if the alleged criminal offence is greater than a specific monetary value
2. They will not be interested because of the potential complexity of the issues involved which render little chance of a successful prosecution
3. The organisation prefers to deal with such incidents internally, avoiding publicity but implementing dismissal and recovery through civil action
4. The Police will want hard evidence before they will pursue investigations, but when it is provided they advise that the rules of evidence have not been complied with.

Protracted internal investigations often unnecessarily delay involving the Police, thereby diminishing the value of co-operation with them. However, properly organised investigations, conducted by individuals with an inside working knowledge of the organisation, will be of great assistance to any subsequent Police enquiry, and management should therefore not be discouraged from liaising with the Police as soon as the issues are identified.

Telephone Contacts

Clerk and Engineer 01636 704371GP

Internal Audit Services 07957977614

Back to the Top