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Policy author: J Hawes rd Date of issue: 3 August 2012 st Date of Next Review: 31 July 2013 2011 Draft Document Version Control: V5 – 2/8/2012 Approvals Process: Date Consulted th 17 August 2011 th 14 August 2012 29th August 2012 Not applicable to this procedure

Last Audit & Risk Approval Senior Management Team Audit & Risk Committee Equality Impact Assessed

livin– Anti-Fraud & Anti-Corruption Strategy


Livin Housing Limited (livin) Anti-Fraud and Corruption Strategy



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Introduction Definitions Corporate Framework - Prevention - Staff of the Organisation - Board Members - Partner Organisations and other Contractors - Internal Control Systems - Information & Communications Technology - Combining With Others to Prevent and Fight Fraud Detection and Investigation Training Deterrence Anti-Money Laundering Conclusion Related Strategies & Policies

1.1 – 1.2 2.1- 2.4 3.1 4.1 5.1 – 5.6 6.1 – 6.2 7.1 – 7.3 8.1 – 8.5 9.1– 9.5 9.6 10.1 – 10.10 11.1 – 11.5 12.1 13.1 – 13.2 14.1 – 14.3 15

3 3 3-4 4 4-5 5 5-6 6 7- 8 8 8-9 9 - 10 10 10 10 11

livin– Anti-Fraud & Anti-Corruption Strategy


Livin Housing Limited Anti-Fraud & Corruption Strategy 1. 1.1

Introduction The Organisation’s Anti-Fraud and Corruption Strategy is based on a series of comprehensive and inter-related procedures designed to deter, frustrate, or take effective action against any attempted fraudulent or corrupt acts affecting the Organisation.


Effective Strategy will require support across the Organisation and involves: • • • • • • •

A Corporate Framework; Prevention (of error, irregularities, fraud and corruption); Detection and Investigation; Training; Deterrence. Awareness raising in respect of Anti-Money Laundering Awareness raising in respect of Anti-Bribery




Fraud “The intentional distortion of financial statements or other records by persons internal or external to the Organisation that is carried out to conceal the misappropriation of assets or otherwise for gain” (See Theft act 1968 and Criminal Justice Act 1987 as amended)


Corruption “The offering, giving, soliciting or acceptance of an inducement or reward that may improperly influence the action of any person” (See prevention of Corruption Acts 1889, 1906 & 1916)


Theft “The dishonest appropriation of property belonging to an individual or organisation with the intention of depriving the owner permanently of its possession” Bribery


“An inducement or reward offered, promised or provided to gain personal, commercial, regulatory or contractual advantage”


Breaches of Regulations Failure to observe standing Orders, Financial Regulations, Contract Procedure Rules, directorate Procedures or Codes of Conduct.

livin– Anti-Fraud & Anti-Corruption Strategy



Corporate Framework


The Corporate Framework requires a whole range of high level component parts, if it is to contribute to the Organisation having an effective counter-fraud strategy, and some of the key ones include:•

An Anti-Fraud & Corruption Policy Statement which emphasises the importance of probity to all concerned;

Board Member support;

Codes of conduct for Board Members and staff;

Protocol for Board Members and staff on Gifts and Hospitality

Anti-Money Laundering Policy

Whistle Blowing Policy

Anti-bribery Policy

Complaints Procedures

Contract Procedure Rules and Financial Regulations;

IT Security Policy

Sound internal control systems, procedures and reliable records;

Effective internal audit;

Effective recruitment procedures;

The Organisation’s Disciplinary Procedure;

Clear responsibilities, accountabilities and standards;

Induction and training.

Communications Strategy




Within the overall corporate framework there are a number of key people and measures which can help in the prevention of fraud and corruption, and these are: • • • • • •

Staff of the Organisation; Board Members; Internal Control Systems; Information & communications Technology Combining with Others to Prevent and Fight Fraud Training and Awareness Plan

livin– Anti-Fraud & Anti-Corruption Strategy



Staff of the Organisation


A key preventative measure in the fight against fraud and corruption is to take effective steps at the recruitment stage to establish, as far as possible, the previous record of potential staff, in terms of their propriety and integrity. In this regard, temporary staff should be treated in the same manner as permanent staff.


Staff recruitment should be in accordance with procedures laid down by the Executive Director People and Communities. Whenever possible, written references should be obtained with specific assurances regarding the known honesty and integrity of potential staff before formal employment offers are made.


All staff must abide by the Organisation’s Code of Conduct for Staff, which sets out the Organisation’s requirement on personal conduct. This Code forms part of the terms and conditions of Employment. Staff of the Organisation are expected to follow any code of conduct related to their personal Professional Institute.


The Organisation has in place staff disciplinary procedures. Any breach of conduct will be dealt with under these procedures and may result in dismissal.


Staff are reminded under the Organisation’s Contracts Procedure Rules that they must disclosure any pecuniary interests in contracts relating to the Organisation or the non-acceptance of any fees or rewards whatsoever other than their proper remuneration. These requirements are set out in the Organisation’s Code of Conduct for Staff.


The Executive Director People and Communities has overall responsibility for the maintenance and operation of the Organisation’s Whistle Blowing Policy.


Board Members


Board Members are required to operate within: •

The Organisation’s Code of Conduct for Board Members;

The Organisation’s Rules of Procedure.


These matters and other guidance are specifically brought to the attention of Board Members as part of the Board training and development programme; they include rules on the declaration and registration with the Chief Executive of potential areas of conflict between Board Members' Organisation duties and responsibilities and any other areas of their personal or professional lives.


Partner Organisations and other contractors


Partners and other contractors are required to be aware of and operate within: o The Organisation’s terms and conditions relating to contracts and specifically those relating to Corrupt gifts and declarations of interest

livin– Anti-Fraud & Anti-Corruption Strategy


The Organisation’s contract procedure rules in relation to the provision of goods and services and specifically those relating to: o Prevention of Corruption o Declaration of Interests

The Organisation’s anti-Bribery Policy


All contracts, quotations for work and Service Level Agreements must include reference to the Organisation’s stance on the prevention of fraud and corruption.


All suppliers of goods and services to the Organisation must provide a duly authorised Contractors Declaration of interest form which includes confirmation of acceptance of livin’s Standard Terms and Conditions of Contract.


Internal Control Systems


The Organisation has Contract Procedure Rules, Financial Regulations, other rules and codes of conduct in place that provide a requirement on staff, when dealing with the Organisation’s affairs, to act in accordance with best practice.


The Executive Director Finance and Governance has a responsibility to ensure that proper arrangements are made for the Organisation’s financial affairs. In addition, he is required to determine the accounting control systems which include: •

"Measures to enable the prevention and detection of inaccuracies and fraud",

"Identification of the duties of staff dealing with financial transactions and the division of responsibilities of those staff in relation to significant transactions".

The latter requirement is a key control in the prevention of impropriety. 8.3

The Organisation’s aim is to have sound financial systems and procedures which incorporate efficient and effective internal controls. As part of the Strategy, the "separation of duties" should be considered as a fundamental control in systems, especially when involving significant transactions.


Under the Organisation’s Financial Regulations, Executive Directors are responsible for ensuring that adequate controls are in place. The existence, appropriateness, and effectiveness of these internal controls is independently monitored and reported upon by the Organisation’s Internal Audit provider.


Unfortunately, the best method of deterring fraudulent activity may be to ensure that fraudsters are left in no doubt about the consequences of their actions. This Organisation will investigate fully all instances of suspected fraud and corruption brought to its attention and will normally refer such matters to the police for criminal investigation. More information can be found in the Organisation’s Fraud Response Plan.

livin– Anti-Fraud & Anti-Corruption Strategy



Information & Communications Technology


The Organisation is utilizing Information and Communications Technology (ICT) to an increasing degree in the conduct of its business. Increased use of the internet, e-mail facilities for Board and staff, electronic purchasing systems and computerised systems bring new opportunities for the perpetration of fraud. It is important that the Organisation has in place procedures and systems that minimize these opportunities and improve the chances of fraudulent activity being detected.


There are three strands to the Organisation’s attempts to combat fraud conducted via the mechanism of ICT. These are as follows: • The adoption of an Information Security policy for Staff & Board Members • Internal audit and external review of major computerised financial and management systems • Review of the detailed workings of computer systems.


Information Security Policy

9.3.1 This policy covers a wide range of issues related to the general controls to be adopted when utilising ICT, including specific sections dealing with the use of passwords, access permissions, physical security, responses to security breaches and the use of internet for the ordering, purchasing of goods. 9.3.2 The information Security policy is posted on the Organisation’s intranet. All new starters entered onto the computer network receive an email incorporating a link to the policy. Deliberate breaches of the procedures set out in the policy are regarded as a serious matter and could lead to relevant disciplinary procedures being invoked. 9.4

Internal Audit Review

9.4.1 The Internal Audit plan provides for system reviews of all major financial and management systems, whether computerised on manual. The audit frequency is determined by a formal risk assessment by PricewaterhouseCoopers with the aim of all major systems being reviewed over a three year period. Fraud is one of the business risks identified by the risk management process and this is used to target areas for proactive internal audit work. 9.4.2 Internal Audit reports include an audit opinion which provides assurance to management in one of five categories (Critical, High, Moderate, low, No) about the liability of internal controls to achieve the Organisation’s objectives. These objectives include the prevention of fraud.


Review of Computer Systems

livin– Anti-Fraud & Anti-Corruption Strategy


9.5.1 The most difficult ICT system fraud to detect, and potentially the most costly, is that which occurs when there is tampering with the running of the computer systems themselves. The main controls applied in this area are the verification of the system inputs and outputs by different sets of users and the careful segregation of duties where appropriate. The ICT service is developing its own operational risk register containing the controls and mitigations in place to prevent unauthorised access to ICT systems or unauthorised changes to them. 9.6

Combining with Others to Prevent and Fight Fraud

9.6.1 The Organisation is committed to exchanging information with other local and national agencies in order to identify and prevent fraud. Such activity is carried out in full compliance with the Data Protection Act 1998 and with the Code of Practice for National Fraud Initiative Data Matching Exercises and includes providing payroll information to other agencies for data matching purposes. Any staff found to be perpetrating fraud on another local or national agency is liable to face disciplinary action where this has implications for the Organisation’s trust and confidence in the staff. In certain cases disciplinary action could lead to dismissal.


Detection and Investigation


It is the responsibility of Executive Directors and their managers to prevent and detect fraud and corruption.


In addition, Internal Audit and External Audit will liaise closely and implement a cyclical programme of audits which will test for fraud and corruption.


However, despite the best efforts of managers and auditors, many frauds are discovered by chance or "tip-off". It is often the alertness of staff and the public that enables detection to occur. In such cases there is a requirement within the Organisation’s Financial Regulations and Paragraph 4 of the Anti-Fraud and Corruption Policy to inform the Executive Director Finance and Governance.


The Anti-Fraud & Corruption Policy Statement provides a clear path for raising concerns and facilitating "tip-offs", and the fraud-response arrangements, outlined in this Strategy, enable such information or allegations to be properly dealt with. The Organisation’s Anti-Money Laundering and Whistle Blowing Policies also provides advice on how to raise a concern and the safeguards and support that are available to those who raise concerns.


All Allegations of fraudulent activity notified to the Executive Director Finance and Governance are considered by the Organisation’s Internal Audit provider. Some are followed up with a full investigation; others are better dealt with as a management issue. However, in order that appropriate action can be taken in each case it is vital to; •

report allegations swiftly

record all evidence that has been received;

livin– Anti-Fraud & Anti-Corruption Strategy



ensure that evidence is sound and adequately supported;

make secure all of the evidence that has been collected;

refer, where appropriate, to the Organisation’s disciplinary procedures;

Reporting suspected irregularities is essential to the Anti-Fraud and Anti-Corruption Strategy and ensures: •

Consistent treatment of information regarding fraud and corruption;

Proper investigation, if necessary, by an independent and experienced audit team;

The optimum protection of the Organisation’s interests.


Depending on the nature and anticipated extent of the allegations, Internal Audit will normally work closely with management, HR, legal etc., and other agencies, such as the Police. This is to ensure that all allegations and evidence are properly investigated and reported upon, and where appropriate, maximum recoveries are made for the Organisation.


The Organisation’s disciplinary procedures will be used to the fullest extent where the outcome of the Audit investigation indicates that fraud has taken place.


Where financial impropriety is discovered, the Organisation’s presumption is that the Police will be called in. The Crown Prosecution Service determines whether or not a prosecution will be pursued. Referral to the Police is a matter for the Executive Director Finance and Governance and the relevant Executive Director. Various staff will be consulted during investigations and the Chief Executive will be kept informed of referrals to the Police. Referral to the Police will not inhibit action under the disciplinary procedure.

10.10 The Organisation’s External Auditor also has powers to independently investigate fraud and corruption, and the Organisation can use his services for this purpose too. 11.



The Organisation recognises that the continuing success of its Anti-Fraud and Corruption Strategy and its general credibility will depend largely on the effectiveness of programmed training, communication and responsiveness of staffs throughout the organisation.


To facilitate this, the Organisation supports the concept of full induction, training and follow-up training; this applies particularly to staff involved in internal control systems and financial and finance-related systems, to ensure that their responsibilities and duties in this respect are regularly highlighted and reinforced, and to casual, temporary and agency staff, who may not be aware of the high standards of probity that are required in the public sector.


The Organisation intranet will be utilised to promote the Anti-Fraud and Corruption

livin– Anti-Fraud & Anti-Corruption Strategy


Policy and Strategy and associated documents, procedures and information. 11.4

The review of the Organisation’s internal control systems and the investigation of fraud and corruption centres on Internal Audit.


The staff involved in the review of internal control systems and investigative work should be properly and regularly trained; the training plans will reflect this requirement.




There are a number of ways to deter potential fraudsters from committing or attempting fraudulent or corrupt acts, whether they are inside and/or outside of the Organisation, and these include:•

Publicising the fact that the Organisation is firmly set against fraud and corruption and states this at every appropriate opportunity - e.g., clause in contracts, statements on benefits claim forms, website, publications etc.;

Acting robustly and decisively when fraud and corruption are suspected and proven - e.g., the termination of contracts, dismissal, prosecution etc.;

Taking action to effect the maximum recoveries for the Organisation - e.g. through agreement, Court action, penalties etc.;

Having sound internal control systems, that still allow for innovation, but at the same time minimising the opportunity for fraud and corruption.


Anti-Money Laundering


The proceeds of crime act 2002, the Money Laundering Regulations 2003 and other legislation now make it a criminal offence to help a criminal “launder” the proceeds of crime. I.e. to benefit from any type of criminal activity.


The legislation is very wide ranging and all staff and Board members need to be aware of the Organisation’s anti-money Laundering Policy and related Procedures.




The Organisation has in place a clear network of systems and procedures to assist it in the fight against fraud and corruption. It is determined that these arrangements will keep pace with any future developments, in both prevention and detection techniques, regarding fraudulent or corrupt activity that may affect its operation or related responsibilities.


To this end, the Organisation maintains a continuous overview of such arrangements, in particular, through the roles of the Executive Director Finance and Governance and Executive Director People and Communities, the Contract Procedure rules and Financial Regulations, Codes of Conduct and various codes of financial practice, accounting instructions and audit arrangements.

livin– Anti-Fraud & Anti-Corruption Strategy



Both the Policy Statement and Strategy will be subject to review annually by the Executive Director Finance and Governance to ensure that they remain current.


Related Strategies & Policies • • •

Whistle Blowing Policy Anti-Money Laundering Policy (Also Treasury Management Policy 9) Anti-bribery Policy Statement


livin– Anti-Fraud & Anti-Corruption Strategy


Anti-Fraud and Corruption Strategy  

The strategy is based on a series of comprehensive and inter-related procedures designed to deter, frustrate or take effective action agains...

Anti-Fraud and Corruption Strategy  

The strategy is based on a series of comprehensive and inter-related procedures designed to deter, frustrate or take effective action agains...