Anti Fraud and Corruption Policy

CONTENTS:

1 INTRODUCTION

2 DEFINITIONS OF FRAUD, THEFT AND CORRUPTION

3 ANTI FRAUD AND CORRUPTION POLICY

4 STRATEGY FOR DEALING WITH THEFT, FRAUD AND CORRUPTION

5 RELATED DOCUMENTS

 

APPENDICES:

A. FRAUD RESPONSE PLAN

 

1. INTRODUCTION

The Council's commitment to protecting public funds against fraud and corruption is set out in the policy statement. (See Section 3). The policy and strategy are designed to deter, prevent and detect fraud and to provide effective action against fraud and corruption both internally and externally. Our policy for dealing with fraud applies to employees, members, contractors, consultants, suppliers, service users and members of the public who have dealings with the Council.

The Council has a separate Anti-Fraud Strategy and Prosecution Policy for Housing and Council Tax Benefit.

The Council's Expectations:

• Members and staff

The Council's expectation is that Members and staff at all levels will act with integrity and lead by example in ensuring adherence to rules, procedures and regulations.

The Council acknowledges the principles set out by the Nolan Committee on Standards in Public Life. The Committee defined seven principles for public life, which are incorporated in the Council's Codes and Protocols as supplementary guidance for members.

• Third Parties

The Council also expects that any individuals or organisations with whom the Council deals in any capacity will behave towards the Council with integrity and without intent or actions involving fraud or corruption.

The Council expects the highest standards of probity in all its activities and has in place a robust framework of systems and procedures to assist in the fight against fraud and corruption.

In summary, this document sets out the Council's clear commitment to fight fraud and corruption and also its arrangements for the prevention, deterrence, detection and investigation of such activities.

2. DEFINITIONS OF FRAUD, THEFT AND CORRUPTION

2.1 Fraud

Fraud includes deception, bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement, misappropriation, false representation, concealment and collusion.

"Fraud can be defined as those intentional distortions of financial statements or other records which are carried out to conceal the misappropriation of assets or otherwise for gain." (CIPFA)

"Fraud involves the use of deception to obtain an unjust or illegal financial advantage." (Auditing Practices Board)

2.2. Corruption

An employee or member is generally held to act corruptly when putting personal gain before public or corporate interests.

Corruption may be defined as a payment, favour or gift given to an officer or member of the council as a reward, or as an incentive to that person for actions contrary to the proper conduct of his / her duties.

2.3. Theft

Theft is the dishonest taking of property belonging to another with the intention of permanently depriving the owner of its possession.

3. ANTI-FRAUD AND CORRUPTION POLICY

3.1 Statement of Intent

Shrewsbury and Atcham Borough Council is committed to sound corporate governance and protecting the public funds that it administers.

The Council's policy on fraud is to:

• Prevent and deter it in the first instance

• Detect it quickly

• Investigate it efficiently

The Council will not tolerate abuse of its services. Where our investigations show that fraud, theft or corruption has taken place, we will take positive and appropriate action against the perpetrators. The form of action taken will depend on the level and circumstances of the fraud discovered.

We will:

• Take disciplinary action against council employees who have broken our rules and procedures.

• Prosecute offenders.

• Seek recovery of council assets or funds or compensation if this is appropriate.

All members and officers must help the Council to apply this policy, by working to discourage, prevent and punish fraud and corruption by others.

3.2. Reporting of Fraud and Corruption

The Council expects all elected members and employees of the Council to report any concerns that they may have in respect of fraud and corruption.

Employees are an important element in the stand against fraud and corruption and are positively encouraged to raise any concerns they may have on these issues, which impact on Council activities. The methods by which concerns should be raised are contained in the Fraud Response Plan (Appendix B).

Employees who raise genuine concerns about fraud or corruption in the Council are fully protected by the Public Interest Disclosure Act 1988, as explained in the Council's Whistle Blowing Code of Practice.

Members of the public are also encouraged to report concerns about fraud and corruption by contacting the Council's Internal Audit Section or the office of the District Auditor.

3.3. Responsibilities for the Investigation of Fraud and Corruption

The responsibility for the investigation of fraud and corruption perpetrated against the Council generally rests with the Fraud Officers for all housing benefit cases and with the internal audit section for all non-benefit related matters. In some cases, police or external agencies may also be involved.

4. STRATEGY FOR DEALING WITH THEFT, FRAUD AND CORRUPTION

4.1. Introduction

The Council recognises that it is impossible to prevent all theft, fraud and corruption. The Council's objective is to operate in ways that make theft, fraud and corruption difficult to commit, likely to be detected and then certain to be punished.

The Council's strategy covers the prevention, deterrence, detection and investigation of Fraud and Corruption.

4.2. Responsibilities

Each individual member and employee is responsible for his or her own conduct, and for playing a part in the safeguarding of corporate standards. This means that:

1. Their own behaviour should be above reproach

2. Where they are aware of, or suspect, that others may be behaving improperly, or have reason to believe that the Council's systems may be unsound, they have a duty to report this to an appropriate officer.

Elected members are required to operate within Sections 94 – 97 of the Local Government Act, 1972

In addition, some officers have specific roles in particular areas as follows:

Monitoring Officer

The Council's Monitoring Officer is responsible under Section 5 of the Local Government and Housing Act, 1989, to guard against, inter alia, illegality, impropriety and maladministration in the Council's affairs.

Head of Finance

The Council has a statutory responsibility, under Section 151 of the Local Government Act, 1972, to ensure the proper administration of its financial affairs and also to nominate one of its officers to take responsibility for those affairs. The Council's nominated officer is the Head of Finance.

The Head of Finance is responsible under Financial Regulations for:

• the development and maintenance of an anti-fraud and anti-corruption policy,

• preparing the Council's risk management policy, and

• advising on effective systems of internal control which will ensure that public funds are properly safeguarded and used economically, efficiently, and in accordance with the statutory and other authorities that govern their use.

4.3. Preventative Measures – "Getting it Right"

The Council will take all reasonable steps to ensure that theft, fraud and corruption are difficult to perpetrate. The Council operates within a framework of:

• A Constitution

• Members' Code of Conduct

• Staff Code of Conduct

• Financial Regulations and Procedures

• Proper Systems and Controls.

• Internal Audit

• External Audit

These are designed to prevent fraud and corruption and to enhance accountability to the public.

Constitution

The Council's Constitution regulates the behaviour of individuals and groups through codes of conduct, protocols and standing orders.

Members' Code of Conduct

Members are required to observe the Council's Code of Conduct when acting as a representative or conducting the business of the Council.

Members are required to register financial interests in the authority's register by providing written notification to the Monitoring Officer.

The Council's Code of Conduct incorporates General Principles governing the official conduct of members and co-opted members.

Staff Code of Conduct

The Code of Conduct sets out the standards which staff are expected to meet in conducting Council business. Staff who fail to live up to the standards are liable to disciplinary action.

In accordance with Section 117 of the Local Government Act, 1972, employees must disclose any personal interest in contracts that have been, or are proposed to be, entered into by the Council.

Section 117 also prohibits the acceptance of fees, gifts or rewards other than by way of proper remuneration from the Council. The Officers' Code of Conduct (Annex iii) provides detailed guidance to employees on offers of gifts or hospitality and the use of public funds entrusted to them.

Financial Regulations and Procedures

Financial Regulations set out the financial policies of the Council and provide the framework for managing the Council's affairs. They apply to every member and officer of the Council and anyone acting on its behalf.

The Council also has detailed financial procedures setting out how the regulations will be implemented. These are contained in the appendices to the Financial Regulations.

Proper Systems and Controls

Management bears the main responsibility for ensuring that reasonable measures are in place to prevent fraud and corruption and the Council has proper systems and internal controls to ensure that public funds are properly safeguarded and used.

Internal Audit

The Council maintains an adequate and effective system of internal audit of its accounting records and control systems as required by the Accounts and Audit Regulations, 1996. Internal Audit plays a preventative role in ensuring that systems and procedures are in place to prevent and deter fraud.

The internal audit section carry out systems based reviews of all areas of council activity and provides advice and assistance to management on procedures and controls.

The internal audit section is also developing risk management, identifying operational risks, and controls to mitigate them, in conjunction with Service Managers.

External Audit

The external auditor has a responsibility to review the Council's arrangements in respect of preventing and detecting frauds and irregularities, and arrangements designed to limit the opportunity for corrupt practices.

Whilst it is not the external auditor's responsibility to prevent fraud and irregularities, District Audit are always alert to the possibility of fraud and corruption and will take action if grounds for suspicion are identified.

4.4. Deterrence and Detective Measures – "Keeping it Right"

Management Checks

It is important that management at all levels within the Council are alert to potential problems in their work area and that adequate and effective safeguards are in place to prevent financial irregularities. However, managers should also satisfy themselves that checks are in place at the appropriate levels, so that in the event of a breach, any irregularity would be picked up promptly, so minimising any loss to the Council.

Whistleblowing

Employees play a vital role in detecting fraud, theft and corruption. All employees are encouraged to discuss their concerns with line management. The Council has a Whistleblowing Code of Practice.

Prosecution

The Council is determined to deal with fraudsters in the strongest possible terms.

The Council will involve the police to pursue the prosecution of offenders. This is designed to deter others from committing offences against the Council.

The decision as to whether to prosecute or not will ultimately rest with the police and the Crown Prosecution Service

Disciplinary Action

The Council will treat fraud and corruption committed against it by employees as a serious offence. Employees will face disciplinary action where there is evidence that they have been involved in these activities. Disciplinary action may result in dismissal from the Council's service.

Publicity

Press releases and publicity about theft, fraud and corruption may be used to act as a deterrent to potential fraudsters

Restitution

Where fraud and corruption is proved and the Council has suffered a financial loss, then the Council will seek to recover the full value of any loss from the perpetrators.

4.5. Investigation and Reporting – " Putting it Right"

Investigation

The Council will ensure that all investigations carried out into suspected fraud and corruption will comply with legislative requirements.

The internal audit section is responsible for the investigation of all suspected fraud and corruption, apart from Council Tax and Housing Benefit.

Audit Reporting and Follow Up

Most instances of fraud and corruption highlight a lack of adequate internal control. It may be that the system was weak or that the controls were bypassed or not in existence.

The Council expects all managers to respond to, and act upon, reports issued by Internal Audit. In the case of recommendations made after an instance of fraud and corruption, they are made to reduce the risk of this recurring.

Fraud Response Plan

The Council will deal promptly with suspicions and allegations of theft, fraud or corruption. The Council’s Fraud Response Plan gives basic guidance to employees and managers of the authority to help them take the right action and contact the right people. It also outlines the way in which fraud and irregularity investigations will be conducted.

The Fraud Response Plan is based on guidance issued by the Audit Commission and is attached at Appendix A.

External Reporting

The Audit Commission requires the Council to report cases of Fraud and Corruption on an annual basis as follows:

• Fraud

Where there has been intentional distortion of records to conceal the misappropriation of assets or other for gain.

Individual cases with a value exceeding £1,000.

• Corrupt Acts

Where the offering, giving, soliciting or acceptance of inducements may have influenced a persons actions.

All cases regardless of value.

A Fraud and Corruption Annual Return is sent to the Audit Commission via District Audit. Individual incidents are also reported to District Audit as and when they occur.

5. RELATED DOCUMENTS

5.1. Whistle Blowing – Code of Practice

5.2. Gifts and Hospitality

5.3. The Council’s Code of Conduct

5.4. Officers’ Code of Conduct

5.5. Guidance on Offers of Gifts or Hospitality

5.6  Housing Benefit / Council Tax Benefit Anti-Fraud Strategy

5.7  Housing and Council Tax Benefit Prosecution Policy

APPENDIX A

FRAUD RESPONSE PLAN

1. Reporting Suspected Fraud, Corruption or Other Malpractice

1.1. Employees

Employees are encouraged, and indeed expected, to raise any concerns that they may have about fraud or corruption in the workplace, without fear of recrimination. Such concerns will be treated in the strictest confidence and will be properly investigated. If you suspect a fraud within the workplace, there are a few simple guidelines that should be followed:

DO:

• Make an immediate note of your concerns
• Convey your suspicions to someone with the appropriate authority and experience (see below)
• Deal with the matter promptly if you feel your concerns are warranted

DON’T:

• Do Nothing
• Be afraid of raising your concerns
• Approach or accuse any individual directly
• Try to investigate the matter yourself
• Convey your suspicions to anyone other than those with the proper authority

Deciding who is the appropriate person to contact within the Council will depend on the seriousness of the matter and who is suspected of being involved in the theft, fraud or corruption. Within your department the appropriate contact could be:

• Your Line Manager
• Service Manager
• Service Director

If you think that management is involved, then, in accordance with the Council’s Whistleblowing Code of Practice, approach should be made to:

• The Council Manager
• Monitoring Officer
• Head of Finance

1.2. Elected Members

Elected members should normally report any concerns to any of the following:

• The Council Manager
• Monitoring Officer
• Head of Finance

1.3. The Public

The General Public are also encouraged to report any concerns through any of the above officers.

Any information concerning suspected fraud or corruption involving an Elected Member must be referred to the Council Manager.

In the event that any person feels unable to raise their concerns with an Officer of the Council, they may wish to report those concerns to the District Auditor as the Council’s external auditor.

2. Action Following Allegations of Theft, Fraud or Corruption

2.1. Managers

There are some common sense guidelines issued by the Audit Commission that managers should apply in all cases where fraud or corruption is suspected in the workplace.

DO:

• Be responsive to staff concerns
• Note details

• Evaluate the allegation objectively
• Deal with the matter promptly if you feel your concerns are warranted.
• Advise the appropriate person (see below)

DON’T:

• Ridicule suspicions raised by staff
• Approach or accuse any individuals directly
• Convey your suspicions to anyone other than those with the proper authority
• Try to investigate the matter yourself

Fraud and Corruption

Any Manager who has received information about any suspected fraud or corruption must report it immediately to the Service Director and the Head of Finance.

Theft

In the case of theft, the Manager should make direct contact with the police if sufficient evidence exists to indicate that a theft has occurred. The Council’s insurance officer should also be notified.

3. Investigating and Acting Upon Suspected Theft, Fraud or Corruption

3.1. Investigation

Any information concerning suspected fraud or corruption involving an elected member will normally be referred to the District Auditor and / or the Police.

The internal audit section will investigate all other potential or alleged cases of fraud, corruption or breach of Financial Regulations or Standing Orders.

Managers will co-operate fully with the internal audit section and / or the Police during any investigation.

3.2  Interviews

Interviews will only be conducted by the Police or by officers who have adequate training and awareness of the correct procedures to be followed, including the Police and Criminal Evidence Act, 1984.

3.3. Evidence

Evidence of fraud or corruption must be gathered objectively, systematically, and in a well-documented manner.

3.4. Criminal Proceedings

Senior Management will deal swiftly fairly and firmly with those who offend against the Council.

The Monitoring Officer will decide whether or not to refer a case to the police where there appears to be sufficient evidence for criminal proceedings.

3.5. Disciplinary Action

Senior managers will implement the Council’s disciplinary procedure where appropriate.

4. Reporting and Follow Up of Fraud and Corruption

4.1  Internal Audit Report

In all cases an Internal Audit Report will be prepared and distributed to:

• The Council Manager
• Monitoring Officer
• Head of Finance
• Service Director
• Service Manager

4.2  Audit Recommendations

Internal Audit will make appropriate recommendations to improve internal control if weaknesses in systems have presented the opportunity to perpetrate a corrupt or fraudulent act.

Managers will take prompt action to implement any recommendations made by internal audit.

4.3  Reporting to District Audit

The Chief Internal Auditor will inform the District Auditor of cases of theft, fraud or corruption in the following circumstances, where:

• the value is significant ( in excess of £1,000)
• the case may be relevant to other organisations
• the case is politically sensitive
• the fraud may be material to the authority’s accounts
• wider powers of interview of the District Auditor can assist the investigation.