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FRAUD AND CORRUPTION PREVENTION GUIDELINES

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					                                     GUIDELINE

                 FRAUD AND CORRUPTION
                 PREVENTION GUIDELINES
Contact          Chief Financial Officer
Officer



Purpose
These guidelines state the University’s strategy for the prevention of Fraud and
Corruption. The purpose of this strategy is to protect the University’s assets and
reputation by

• reinforcing senior management’s commitment and responsibility for identifying risk
  exposures to fraudulent and corrupt activities and for establishing policies, controls
  and procedures for prevention and detection of these activities.
• reinforcing the requirement for all staff and others to refrain from corrupt conduct and
  fraudulent activities and encourage the reporting of any instance of fraud or corrupt
  conduct.
• ensuring that all suspected fraudulent and corrupt activity is dealt with appropriately.



Guideline
Macquarie University has a broad range of stakeholders who expect the University to act
in an accountable manner. If fraud or corruption is committed against the University, the
impact on the University may be significant including damage to the University’s
reputation. image and standing in the community. Fraud and corruption prevention
strategies demonstrate sound management practice and governance and assist the
University in deterring unethical behaviour.

The risk of fraud and corruption is ever present. The following are some of the factors
that add to, or a least change the University’s risk.
• changes in government funding leading to an increasing reliance on non-government
   funding.
• ventures into new markets and areas of operations.
• the development of commercial strategies to capitalize on the development of
   intellectual property and marketable products and services.
• convergence of the university sector and the private sector through the increase in
   cooperative, and/or strategic partnerships.
• greater competition in the allocation of scarce resources.
• greater competition in the university sector for domestic and overseas students, staff,
   research funds, industry support and status.
• increased regulatory requirements
• increased availability and extensive use of technology
• tighter timeframes and deadlines




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Effective fraud and corruption control requires the commitment and involvement of all
employees, contractors, customers and external service providers. It is therefore
imperative that all staff are aware of what within the University is at risk and the types of
fraud and corrupt behaviour that can occur.

In implementing its Fraud and Corruption prevention strategies the University has regard
to the following standards and Acts:-

• Annual Reports (Statutory Bodies) Act 1984
• Anti-Discrimination Act 1977
• Australian Standard:AS8001-2003 Corporate Governance – Fraud and Corruption
  Control
• Australian/New Zealand Standard (AS/NZS 4360:1999) – Risk Management.
• Crimes Act 1900
• Finance and Audit Act 1983
• Freedom of information Act 1989
• Higher Education Support Act 2003
• Independent Commission Against Corruption Act 2005
• Macquarie University Act 1989
• Omsbudsman Act 1974
• Privacy Act 1988
• Privacy Amendment Act (Private Sector) 2000
• Privacy and Personal Information Act 1998
• Protected Disclosures Act 1994
• Public Finance and Audit Act 1983
• State Records Act 1998
• Universities Legislation Amendment (Financial and Other Powers) Act 2001.
• Workers Compensation Act 1987
• Workplace Injury Management & Workers Compensation Act 1998


Definition of Corruption
The Australian Standard on Fraud and Corruption Control defines corruption as:
“Dishonest activity in which a director, executive, manager, employee or contractor of an
entity acts contrary to the interests of the entity and abuses his/her position of trust in
order to achieve some personal gain or advantage for him or herself or for another
person or entity.”
The ICAC defines corrupt conduct, as it affects a public authority, as:
“ Corrupt conduct is also any conduct of any person (whether or not a public official) that
adversely affects, or that could adversely affect, either directly or indirectly, the exercise
of official functions by any public official, any group or body of public officials or any
public authority and which could involve any of the following matters:
(a) official misconduct (including breach of trust, fraud in office, nonfeasance,
    misfeasance, malfeasance, oppression, extortion or imposition),
(b) bribery,
(c) blackmail,
(d) obtaining or offering secret commissions,




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(e) fraud,
(f) theft,
(g) perverting the course of justice,
(h) embezzlement,
(i) election bribery,
(j) election funding offences,
(k) election fraud,
(l) treating,
(m) tax evasion,
(n) revenue evasion,
(o) currency violations,
(p) illegal drug dealings,
(q) illegal gambling
(r) obtaining financial benefit by vice engaged in by others,
(s) bankruptcy and company violations,
(t) harbouring criminals,
(u) forgery,
(v) treason or other offences against the Sovereign,
(w) homicide or violence,
(x) matters of the same or a similar nature to any listed above,
(y) any conspiracy or attempt in relation to any of the above.”



Examples of Corrupt Conduct.
Examples of corrupt conduct to which the University may be subject include:
   Payment of secret commissions (bribes) paid in money, or some other value, to a
   University staff member that is related to a specific action or decision of the University
   staff member.
   Release of confidential information, for other than a proper business purpose,
   sometimes in exchange for either a financial or non-financial advantage.
   Collusive tendering (the act of multiple tenderers for a particular contract colluding in
   preparation of their bids).
   A University staff member manipulating a tendering process to achieve a desired
   outcome.
   Conflict of interest involving a University staff member acting in his or her own self-
   interest rather than the interests of the University.
   Nepotism and cronyism where the appointee to a University position is inadequately
   qualified to perform the role to which he or she has been appointed, or not selected
   on merit.
   Receiving personal benefits in exchange for assisting a consultant to gain work at the




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   University.
Definition of Fraud.
Fraud is recognised as a subset of corruption.
The Australian Standard on Fraud and Corruption Control 1 defines fraud as:
“Dishonest activity causing actual or potential financial loss to any person or entity
including theft of moneys or other property by employees or persons external to the
entity and whether or not deception is used at the time, immediately before or
immediately following the activity. This also includes the deliberate falsification,
concealment, destruction or use of falsified documentation used or intended for use for a
normal business purpose or the improper use of information or position.”
Examples of Fraud

Examples of fraud on the University could include, but are not limited to:
   Misappropriating University assets including use of the University’s assets for private
   purposes.
   Abuse of University property.
   Abuse of University time.
   Causing a loss to the University, or avoiding or creating a liability for the University by
   deception.
   Claiming for travel entitlement to attend a course and then not attending the course
   and not reimbursing travel monies.
   Evasion of fees due to the University.
   Fabrication, falsification or plagiarism of research.
   False invoicing for goods or services never rendered.
   Falsely misrepresenting the author of essays, assignments or research to the
   University.
   Making cheques out to false persons.
   Making, using or possessing forged or falsified documents such as Degrees or
   Academic Records.
• Misapplying government grant monies.
   Misappropriating official order forms to gain a personal benefit.
    Obtaining an unjust advantage by misusing information gained during the course of
    employment with the University.
    Providing false or misleading information to the University, or failing to provide
    information, where there is an obligation to do so.
   Receiving ‘kickbacks’ or ‘secret commissions’ from a contractor.
    Submission of exaggerated or wholly fictitious accident, harassment or injury claims.
   Misuse of sick or family leave.
   Theft of cash or petty cash.




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    Theft of intellectual property.
    Theft of plant, equipment or inventory.
    Unauthorised transferral of University income.
    Unlawful use of University computers, vehicles, internet, telephones and other
     property or services including operation of a private business using University
     facilities and time.
    Use of University credit cards for personal expenses and claiming them as
    University related.
    Using taxi vouchers for private purposes.
Assets of the University vulnerable to fraud and corruption.
The benefits of committing fraud referred to above can be either tangible or intangible
and can involve misuse of:
     Academic records or qualifications.
     Admittance to a program or course.
     Consulting fees.
     Course material.
     Examination results.
     Funding.
     Grants.
     Insurance claims.
     Internet time.
     Motor vehicles.
     Payroll.
     Personal information.
     Petty cash.
     Property, plant and equipment.
     Research information.
•   Rights and ownership of new inventions.
•   Supplies.
•   Telephone calls.
•   Time.

Perpetrators of fraud and corruption
Anyone can commit fraud or corruption. It can be done alone or in collusion with others
within or outside the University. Fraud or corruption could be perpetrated against the
University by:
     a full-time, part-time or casual staff member;
     temporary or agency employee;
     a student;




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    an agent;
   an external individual; or a contractor or service provider

Fraud and corruption awareness.
All staff need to be kept informed about the University’s Fraud and Corruption Prevention
and Response Strategy and what part they are expected to play in it. This will be
achieved in a number of ways by:
   Giving every employee a copy of the organisation’s Code of Conduct as part of their
   contract of employment.
   Informing new staff during induction training.
   Delivering fraud awareness training across as much of the University as possible.
   Making the Code of Conduct and key attributes of the Fraud and Corruption
   Prevention and Response Strategy available to all staff via the University’s intranet.
   Incorporating reminders to staff and students of their obligations to ethical conduct
   and public duties into policies, appointment letters, guidelines, training, and student
   and/or staff communications.


Fraud and corruption detection.
The early detection of fraud and corruption is an essential element of the University’s
strategy.
Surveys of fraud conducted in Australia regularly demonstrate that employees are the
most likely to discover fraud. The University’s staff are therefore the key factor in
detecting fraudulent or corrupt behaviour.
It should be the aim of all staff to detect fraud or corruption as soon as possible after it
occurs. There are a number of ways in which fraud may be detected. These may
include:
   monitoring high risk jobs or areas;
   when internal controls are breached;
   during monthly reviews of strategic management reports such as telephone usage
   reports;
   targeted post transactional review that may indicate altered or missing
   documentation, falsified or altered authorisation or inadequate documentary support;
   departmental reviews or internal audits; or
   when employees notice changes in behaviour patterns such as unusual behaviour or
   expensive lifestyles of other staff members.
Fidelity guarantee insurance
The University is covered by Industrial Special Risks insurance.. The insurance is
renewed on an annual basis (currently 31 October each year). This insurance covers
physical loss, destruction or damage to all real and personal property of every kind and
description belonging to the University or for which the University is responsible or has
assumed responsibility to insure prior to the loss. There are no geographical limits on
this cover.




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The two components relevant to this strategy include:
   Fidelity
   Burglary and theft
There is currently an excess on each claim.
The policy covers any person acting as an agent of the University in carrying out their
duties at the University.
The Industrial Special Risks insurance policy is maintained by the Office of Financial Services.
FRAUD AND CORRUPTION RISK MANAGEMENT.
Fraud and corruption risk assessment
The University aims to conduct fraud risk assessments at least every three years. Where
appropriate, the University may introduce a rolling program of updating risk
assessments.
When the University undergoes a substantial change in structure or function, or where
there is a significant transfer in function (for example, as a result of outsourcing), the
University may undertake further fraud risk assessment in relation to the changed
functions. This fraud risk assessment may form part of a general business risk
assessment exercise.
Staff at all levels in the University should be involved in the fraud and corruption risk
assessment process, particularly those with detailed knowledge of the University’s
practices and procedures because they understand system weaknesses and whether
internal controls are being adhered to. The University recognises that it is important to
ensure that staff involved have relevant training and access to all necessary information
and an understanding of the areas to be examined.
The University’s risk assessment must consider fraud risks from both within the
University and from external factors. Risk assessments must also consider fraud risks
that may emerge in the future. For example, the University needs to be aware of the
changing nature of fraud arising from the greater use of external service providers and
developments in information technology.
Core areas that a fraud risk assessment should consider include:
   Information technology and information security.
   Electronic commerce, electronic service delivery and the Internet.
   Outsourced functions.
   Grants and other payments or benefits programs.
   Tendering processes, purchasing and contract management.
    Intellectual property development and commercialisation.
    Revenue collection.
    Use of University credit cards.
    Travel allowances and other common allowances.
    Payments including salaries.
    Property and other physical assets including physical security.
Fraud and corruption risk assessments should be conducted in accordance with the



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Australian/New Zealand Standard (AS/NZS 4360:1999) - Risk Management. As such
the University aims to document the risk assessment process in order to:
   reflect the risks across the range of functions performed by the University;
   be capable of adequately measuring risks in a comparable way;
   be capable of providing a supportable rating of the risks of fraud including both
   likelihood of a risk occurring and consequences for the University if the risk did occur;
   be amenable to fine-tuning as appropriate; and
   be able to be replicated.
Fraud risk assessments provide details of the University’s risk profile and vulnerability.
Unauthorised access could substantially undermine the viability and effective
management of the University. Therefore fraud risk assessments may be restricted in
circulation, consistent with the sensitivity of the material or subject matter.
Integrating fraud and corruption risk assessment with overall risk assessment.
It is important that fraud and corruption risks are considered in the broader context of
overall business risk so that fraud risk assessment takes into account University-wide
strategic planning. Fraud risk should not be looked at in isolation from the general
business of the University. There is considerable overlap between enterprise risk,
business risk, audit risk, security risk and fraud risk. Other risk management approaches
may have already highlighted changes in strategic directions that will impact on future
fraud risk profiles and control frameworks.
Implementation of proposed actions.
All fraud and corruption risks rated as having a High or Very High level of residual
seriousness should have developed one or more proposed actions aimed at achieving
one or more of the following:
   Alteration of existing internal control procedures.
   New internal control procedures.
   Procedures aimed at detecting fraud.
   Fraud prevention strategies.
The University may also develop proposed actions in relation to risks assessed as being
a lower residual risk.
To ensure comprehensive implementation and provide a periodic check on progress, the
risk assessment teams should, where possible, allocate personal responsibility for the
implementation of each action item.

Internal audit capability
The University outsources its Internal Audit on a three-year cycle. The Internal Audit
function independently reports to the University’s Audit and Risk Committee.
A Strategic Audit Plan is created each year to outline audit and risk management
activities for the ensuing year.
The Strategic Audit Plan also incorporates a University-wide risk assessment that
provides the basis for refining the scope and objectives of each of the audit and risk
management activities to be undertaken.




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Internal audit fraud control function
Internal Audit plays a crucial role in the prevention of fraud and corruption within the
University.
In relation to fraud and corruption control, the University’s Internal Audit strategy includes
ongoing reviews of controls within the University. This includes both:
   reviewing the effectiveness of controls—how they are implemented in practice—via
   observation, interview of key personnel, review of records and sample testing;


   systems type testing—detailed walkthrough of significant processes; and
   special audits where particular areas of concern have been identified.


Review of effectiveness of strategies developed in most recent fraud risk
assessment
It is expected that Faculties and Offices will review the results of the fraud risk
assessments at least annually to ensure that strategies developed during the course of
the most recent fraud risk assessment are reviewed for effectiveness and amended
where necessary.
The Fraud Control Officer will coordinate the compliance with the annual review of fraud
mitigation strategies.


Review and adjustment of the Fraud and Corruption Prevention and Response
Strategy
Fraud and corruption control requires continuous discussion. This may include:
   Keeping track of what other Universities are doing regarding policies and procedures;
   Ensuring reports or reviews of fraud and corruption at Australian Universities are
   assessed for their likely impact on the University’s strategy;
   Encouraging innovation in fraud and corruption control development, procedures and
   processes by staff.
The fraud and corruption control and response strategy will be reviewed and amended
as required by the Fraud Control Officer.




Related Policies / Procedures

Protected Disclosures Policy
Procedure for making a Protected Disclosure
Reportable Gifts and Benefits Policy
Gift and Benefit Reporting Procedure




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Links




Keywords        Fraud, Corruption, Disclosure, Prevention, Internal Audit, ICAC,
                Conflict of Interest




Date Approved           Day Month Year
Approval Authority      eg Assistant Registrar, Coursework Studies Section




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