Areas for Action

Are agreements in place with stakeholder representatives to work together to counter fraud and corruption?

Risk

If such arrangements are not in place there is a risk that:

• articles sent for publication may get inappropriately amended, untimely or not published at all;
• fraud and security issues will not be linked/coordinated;
• Risk Managers will not be aware of fraud issues arising which may result in missed opportunities to prevent future fraud attempts;
• issues arising from audits will not be followed up which may allow opportunities for fraud to develop or continue;
• there will be a lack of clarity as to how sanction and redress decisions are made; and
• there will be inconsistencies in decisions made regarding sanctions and redress.

Areas for Action

Do concluding reports on investigations include a specific section on identified policy and system weaknesses that allowed the fraud and corruption to take place?

Risk

If not there is a risk that:

• the organisation may not learn from its past practice;
• weaknesses may not be reported to internal audit;
• a lack of co-ordination between internal audit and counter fraud work may arise;
• system improvements will not take place;
• the organisation is at risk of not complying with legislation; and
• if specific policies are not addressed, current practices which are fraudulent may continue and may be seen as acceptable.

Areas for Action

Are there effective whistleblowing arrangements in place and are these cross referenced to the Counter Fraud Policy?

Risk

If not there is a risk that:

• potential fraud issues will be dealt with inappropriately and by individuals who have not been appropriately trained;
• staff may be unaware of who to report suspected fraud to and therefore may not report those suspicions; and
• staff may not feel confident/supported in reporting concerns about suspected fraud.

Area for Action

Are analytical intelligence techniques used to identify potential fraud and corruption?

Risk

If not there is a risk that:

• unusual trends/anomalies that may indicate fraud are not spotted and therefore fraud will go undetected;
• counter fraud staff may not build up a picture of the organisation that would enable them to spot unusual activity/transactions that may indicate fraud; and
• external intelligence regarding fraudulent activity may not be reviewed for local applicability and potential.

Area for Action

Are proactive exercises undertaken in key areas of fraud risks or known system weaknesses?

Risk

If not there is a risk that:

• a lack of proactive work may encourage fraudsters/potential fraudsters to commit/carry on committing fraud;
• the organisation may incur/continue to incur losses due to undetected fraud;
• the organisation may be criticised for not having in place a methodology to identify the most appropriate areas in which to conduct proactive exercises; and
• resources may not be targeted to achieve the best possible outcomes for the organisation.

Area for Action

Is the organisation's investigation work effective and is it carried out in accordance with relevant legislation?

Risk

If the organisations investigation work is not effective there is a risk that:

• the organisation will fail to comply with relevant legislation such as Police and Criminal Evidence Act (PACE) and the Criminal Procedures and Investigation Act 1996 (CPIA);
• the organisation will have a greater exposure to potential fraud;
• sanctions will not be imposed;
• redress will not be in place to recover monies lost;

Area for Action

Does the organisation have a clear and consistent policy on the application of sanctions where fraud or corruption is proven to be present?

Risk

If a clear and consistent policy is not in place there is a risk that:

• the organisation's approach may be challenged (e.g. by HR or Trade Unions) for not being clear and transparent, leading to adverse publicity;
• staff may be reluctant to refer cases if the system is perceived to be unfair or non-existent;
• the organisation's capacity to recover losses will be severely jeopardised;
• fraudsters may be allowed to move on to another organisation without their record being known; and
• existing/potential fraudsters are more likely to believe they can get away with fraud if sanctions are not clear and if they perceive that the organisation is unlikely to apply them.

Area for Action

Does the organisation have a clear policy on the recovery of losses incurred due to fraud and corruption?

Risk

If not there is a risk that:

• the organisation's approach may be challenged (e.g. by HR or Trade Unions) for not being clear and transparent, leading to adverse publicity;
• staff may be reluctant to refer cases if the system is perceived to be unfair or non-existent;
• responsibility for redress action will not be delegated to the appropriate staff/section and/or staff will not know how to proceed. This will in turn reduce the organisation's capacity to effectively recover losses incurred to fraud.