Prevention of fraud Policy The OFT, like other public bodies, has a duty to conduct its affairs in a responsible and transparent way. It has a responsibility to HM Treasury, its employees, suppliers and the public in general to take all reasonable steps to prevent the occurrence of fraud. Consequently, the OFT has a zero-tolerance attitude to fraud and will thoroughly and promptly investigate all instances with a view to taking appropriate disciplinary and/or legal action up to and including dismissal and criminal prosecution. Every effort will also be made to recover all cash or assets lost or misappropriated as a consequence of fraud. Everyone in the OFT is expected to contribute to the management of fraud risk and employees are encouraged to report any concerns or suspicions. The OFT undertakes to ensure that they are able to do so without fear of reprisal and the Public Interest Disclosure Act 1998 http://www.opsi.gov.uk/acts/acts1998/19980023.htm and the OFT's whistle- blowing policy provide protection for those who voice genuine and legitimate concerns through the proper channels. This policy applies to everyone employed by the OFT regardless of whether on a permanent, temporary or consultancy basis (referred to herein as 'employees'). Procedure Key roles The accounting officer is responsible for the OFT's system of internal control which safeguards public funds and the OFT's assets. Employees responsible for the management of the system and fraud investigation, are: The chief operating officer, or 'risk owner' for fraud risks, is responsible for ensuring that the OFT's overall arrangements for managing the risk of fraud are appropriate. He personally approves the direction of each fraud investigation and has delegated responsibilities for various functions as set out below. The finance director is responsible for: • the OFT's internal financial procedures and controls, including their review in the light of reported frauds • fraud policy, fraud risk management policy and procedures and liaison with the National Audit Office (NAO) about issues relating to fraud and fraud prevention • managing fraud investigations and giving advice on the action to be taken in specific cases of fraud and suspected fraud • reporting frauds to Treasury • policy on travel and subsistence, gifts, hospitality, procurement and • whistle blowing • physical security and inventory control of the OFT's assets. Internal audit is responsible for: • advice and assistance on control issues as necessary • reviewing systems for the control, prevention and detection of fraud • advice to divisions on cases of fraud • assisting with investigation of fraud within the OFT. Reporting fraud Absolute proof is not necessary before a concern is reported and employees should share their suspicions or concerns as soon as reasonably possible. If an employee does not wish to disclose the information they have to the OFT, a report can be made to a body prescribed by the Secretary of State for the purposes of receiving such information. Further information is available on http://www.pcaw.co.uk/legislation/p_regulators.html Reports of suspected fraud must be discreet to ensure that no-one is harmed by false accusations and that the perpetrator is not forewarned. In the first instance employees should contact the finance director either in person, by telephone, letter or e-mail giving: • the background and history of the concern including relevant dates • the reason for the concern • whether the matter must be treated in confidence. Where the suspected fraud is within the finance function it should be reported to either the HR director or the chief operating officer. If the employee reporting the incident has any personal interest they must declare it at this point. All suspected frauds will be immediately reported to Treasury by the finance director, HR director or chief operating officer as appropriate. Investigation process Employees suspected of fraudulent activity have certain rights under the law and failure to follow established procedures in relation to investigating fraud can invalidate disciplinary action and compromise the success of any future investigation and/or prosecution. Consequently, no action should be taken without prior consultation with HR. The finance director will take immediate personal charge of the situation and acknowledge receipt of the report in writing within 24 hours. The suspect's work station and all documentation will be immediately secured and made inaccessible to the suspect and any other unauthorised employee(s). If an external contractor or consultant is suspected the finance director will immediately suspend any payments due. The finance director will undertake a preliminary review and present an interim report to the chief operating officer and head of internal audit within 24 hours. The chief operating officer and head of internal audit will decide whether a thorough and formal investigation is required. At this point they will also decide whether it is appropriate to suspend with pay those who are implicated. The head of internal audit will immediately inform the NAO who will provide advice to ensure that the investigation is carried out in accordance with robust procedures and fraud policies. If the NAO considers that the nature of the suspicion, or seniority of the employee involved, jeopardises the validity of the investigation they may take control of the investigation. Where a thorough and formal investigation is required it will normally be undertaken by the head of internal audit, who will decide whether it is necessary to engage the services of a specialist fraud investigator. If the alleged fraud was committed using computers the IT manager will ensure that any records on PCs or the OFT network relating to the fraud cannot be accessed, destroyed or corrupted prior to the investigation. Within five working days of a concern being raised, the finance director will confirm in writing to the employee who reported the fraud: • how the matter will be dealt with • an estimate of how long it will take to provide a full response • information on the support available If the investigation requires input from any employee, they will be provided support to minimise any difficulties. This will include the right to be accompanied at any fact-finding meeting by a colleague or Trade Union representative. Individuals under investigation may also be accompanied by a colleague or Trade Union representative. Within five working days of the completion of the investigation the head of internal audit will submit a written report of his findings to the chief operating officer who will, in consultation with the HR and finance directors, decide whether there is a disciplinary and/or legal case to answer. Penalties Where the investigation finds that there is a disciplinary case to answer it will be dealt with through the discipline policy and procedure. Where there has been a failure of management, appropriate disciplinary action may also be taken through the discipline policy and procedure. In all cases the OFT reserves the right to involve the police and a criminal prosecution may result. In addition to any disciplinary or legal action taken, an employee who has committed fraud will be invited to recompense the OFT. If this is refused, or the employee is unable to comply, the OFT may take civil action to recover loss. In the case of overpayment of salary, the loss may be recovered from salary. To facilitate the recovery the finance director will, within five working days of the completion of the investigation, prepare a statement for the employee, chief operating officer and head of internal audit which: • explains the results of the investigation and includes details of the sums/assets lost • seeks the employee's agreement to pay back or compensate the OFT for the loss • details the method of recovery. It should be borne in mind that recovery through salary may not always be appropriate or even desirable. If the fraud was committed by a contractor, agent, consultant or any persons carrying out work for or on behalf of the OFT the finance director, on advice from the OFT's legal advisors, will write to the most senior officer of the supplier to notify them of the fraud, explain the amounts involved and seek recovery of any losses incurred. He will also inform them of the OFT's intentions regarding police involvement and any litigation that might be necessary to recover loss. Appeals Employees against whom action is taken through the discipline policy and procedure as a result of a fraud investigation will have the normal right of appeal provided for in that procedure. Remedial actions Following the investigation the finance director will review the OFT's internal controls to decide whether they need to be strengthened. Recommendations for action will be implemented quickly and progress reported to the audit committee. In the OFT's annual return to the Treasury the finance director will give details of all discovered cases of suspected and proven fraud, including attempted fraud in the following categories: • fraud committed by employees • computer fraud whether committed by employees, contractors, agencies, consultants or any other persons engaged to carry out work for or on behalf of the OFT • fraud by contractors arising from contracts placed by the OFT • all other cases of fraud which reveal potentially significant system weaknesses or exposure to the kind of loss that other government departments might face. If the losses cannot be recovered they will be written off in accordance with chapter 36 of Government Accounting. This will be done by the finance director, who will also determine whether the losses need to be reported to Treasury and/or Parliament and included in the resource accounts. Losses involving assets will also be reported to procurement, and to facilities management and IT if the theft involves IT equipment, to enable relevant asset inventories to be adjusted.
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