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How to stay secure
Rachael Tiffen explains how an organisation can minimise the risk of being a victim of fraud
Transparency International’s recently released Corruption Perception Index 2016 shows that systematic corruption is rife across the globe, with much of the problem linked to the public sector.
The UK public sector is no exception. The CIPFA’s Fraud and Corruption Tracker report found more than £325m worth of fraud had been detected or prevented in the public sector in 2015–16 alone.
Fraud, bribery and corruption involving taxpayer money are all becoming more common – for example, embezzling petty cash or money for trips, and wages and overtime being falsely claimed. As organisations go through transformation, restructuring and reform, fraud risks may increase in the short term as a result of changing systems and processes.
Public bodies must have the skills in place to identify fraudulent activity and to ensure that they have sound oversight and regular monitoring processes.
Recognising a fraud is only part of the challenge; the greater challenge is addressing the issue, especially in cases where fraud has become an embedded culture.
All sectors have had to cut their budgets during almost 10 years of austerity. Limited resources, coupled with a lack of skills to tackle fraud properly, has created significant challenges for public bodies. It is crucial therefore that robust anti-fraud and corruption policies and procedures are developed and maintained. It is preferable to be in a good position to prevent fraud happening in the first place than to deal with its consequences.
Human resources: An organisation must know who they are employing. Employing someone who does not have the necessary qualifications and experience can lead to both reputational and financial damage. It is essential that original documents and proper references on headed paper are provided by potential employees and that potential employers scrutinise what they are given; qualifications, references and employment history should all be checked thoroughly.
The finances: It is essential that those charged with governance carry out their financial responsibilities effectively. They must ensure they receive the information necessary to allow them to do so and that they ask challenging questions and receive satisfactory answers.
Internal controls: Public bodies must have in place sound internal controls, in accordance with accredited standards. There are various forms internal controls can take, including defining roles and responsibilities; clear lines of authority within the organisational structure; appropriate safeguards to limit access to assets, systems and records; authorisation and approval procedures; and agreed accounting procedures.
Policies and procedures: Public bodies should also have a fraud policy statement setting out their stance on fraud and corruption and governing how individuals should act in the event that there is a suspicion of fraud. Staff should know who to report fraud to and management should have a clear fraud response plan on how to deal with the allegation and how any investigation will be managed.
Stay updated: Finally, to counter fraud, it is essential to know what to look out for. It pays to keep up-to-date with trends and behaviours and be able to assess the risks that external threats may present.
• Rachel Tiffen, Head of Counter Fraud, CIPFA
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