Fraud Awareness and Prevention Program Report

Transcription

1 Internal Audit Department Fraud Awareness and Prevention Program Report Project A Review of Fraud Awareness, Prevention, Detection and Risk Mitigation Practices in Landfill Operations, Central County Complex Sarasota Board of County Commissioners Mark R. Simmons, CIA CFE - Director, Internal Audit Silas Wood, CFE - Senior Internal Auditor

2 KAREN E. RUSHING Clerk of the Circuit Court and County Comptroller 2000 Main Street P.O. Box 3079.Sarasota, FL Phone: September 9, 2009 Theresa Connor, Executive Director, Environmental Services Sarasota Board of County Commissioners Dear Ms. Connor: Enclosed is our report on occupational fraud awareness and fraud prevention, detection and risk mitigation processes and controls in, Sarasota County Environmental Services. Managers and staff of have a reasonable awareness of occupational fraud risk and have implemented processes and controls to mitigate fraud risk and prevent or detect fraudulent activity. Opportunities to enhance fraud awareness and occupational fraud risk mitigation efforts and to provide reasonable assurance fraudulent activity will be prevented or detected were discussed with the responsible managers. We wish to express our appreciation for the cooperation and assistance provided by your staff throughout the program survey and review process. Please do not hesitate to contact us if you have any questions. Silas R. Wood III, CFE Senior Internal Auditor Mark R. Simmons, CIA CFE Director, Internal Audit cc: Karen E. Rushing, Clerk of the Circuit Court and County Comptroller James L. Ley, County Administrator David R. Bullock, Deputy County Administrator Susan M. Scott, Deputy County Administrator Jeff Seward, Chief Financial Planning Officer Peter H. Ramsden, Finance Director, Clerk of the Circuit Court and County Comptroller Gerald Bennett, General Manager, Environmental Services, Solid Waste Franklin Coggins, Manager, Environmental Services, Solid Waste, Central County Complex Clerk of Circuit and County Court Clerk of Board of County Commissioners County Comptroller; Auditor and Recorder

3 TABLE OF CONTENTS FRAUD AWARENESS AND PREVENTION PROGRAM REPORT Summary of Program Results 1 Program Objectives 1 Potential Fraud Risks 2 Report Distribution 2 APPENDIX A Fraud Awareness Opportunities to Enhance Fraud Awareness 3 Management Interviews Summary 3-4 Awareness Survey Summary 4 Responsible Management s Action Plan 4-5 APPENDIX B Fraud Prevention and Detection Survey Fraud Prevention and Detection Survey Summary 6-7 APPENDIX C Fraud Prevention, Detection and Risk Mitigation Opportunities to Enhance Fraud Prevention, Detection and Risk Mitigation 8 Scope of Program Review and Testing 8-9 Program Review and Testing Results 9-10 Responsible Management s Action Plan APPENDIX D Occupational Fraud (Definition) APPENDIX E Laws, Policies, Rules and Regulations 14 Internal Audit Department - Clerk of the Circuit Court and County Comptroller i

4 Summary of Program Results Project The managers and staff of, Environmental Services have a reasonable awareness of occupational fraud risk and have implemented processes and controls to mitigate fraud risk and prevent or detect fraudulent activity. Notwithstanding the foregoing, opportunities exist to expand and enhance fraud awareness and efforts to mitigate occupational fraud risk and to provide reasonable assurance fraudulent activity will be prevented or detected. We suggest responsible managers: Implement a fraud risk assessment process plan. Ensure all managers and staff have read, received training, and understand the County s ethics policies and fraud related standards of conduct and their responsibility to report suspicions of unethical or fraudulent activity. Communicate management s commitment to fraud prevention and protection from reprisals for reporting suspicions of fraudulent activity and provide instruction and guidelines to facilitate reporting. Develop comprehensive, location specific, written cash handling, collection and deposit processing procedures and control activities, and provide necessary training to ensure compliance. Amend commercial hauler deposit accounts receivable, revenue collection and deposit processing assignments, operating procedure and control activities to ensure effective separation of assigned responsibilities. Reinforce IT Security policy requiring user passwords be safeguarded against unauthorized access and not shared with other users. Specific fraud risks, concerns and opportunities were discussed with appropriate managers. The responsible managers concur and have taken or plan to take appropriate action by October 31, Detailed program results, opportunities, and management action plans are provided in Appendices A (pages 3-5), B (pages 6-7) and C (pages 8-11). Program Objectives The objectives of the are to: Determine whether the Board of County Commissioners can have reasonable assurance that responsible managers: are aware of and have assessed occupational fraud risk, have identified and addressed the relevant risks and vulnerabilities associated with fraudulent activity, have taken appropriate steps and implemented adequate and effective controls to prevent, deter or detect the incidence of fraudulent activity, and mitigate the risk and potential impact of occupational fraud. Enhance occupational fraud awareness and assist in management s efforts to prevent, deter and detect occupational fraud and to mitigate and control fraud risk. A comprehensive description of occupational fraud is provided in Appendix D (pages 12-13). Internal Audit Department - Clerk of the Circuit Court and County Comptroller 1 of 14

5 Potential Fraud Risks Project The most significant fraud risk exposure associated with Landfill Operations, Central County Complex is the taking or using County assets without consent or authorization. The amounts at risk include: $13.8 million solid waste revenue collections deposited at the landfill scalehouse during FY2008: $9.7 million cash, check and credit card commercial tipping fees $4.1 million municipal tipping fees paid by check Over $6.7 million for FY2009 Solid Waste, Central County Complex, Landfill/Land Management operating expense budget, including: $547,000 payroll $4.9 million contractual landfill operations services $105,700 procurement card purchases by 3 authorized card holders in FY2008 Report Distribution List: Karen E. Rushing, Clerk of the Circuit Court and County Comptroller James L. Ley, County Administrator David R. Bullock, Deputy County Administrator Susan M. Scott, Deputy County Administrator Jeff Seward, Chief Financial Planning Officer Peter H. Ramsden, Finance Director, Clerk of the Circuit Court and County Comptroller Theresa Connor, Executive Director, Environmental Services Gerald Bennett, General Manager, Environmental Services, Solid Waste Franklin Coggins, Manager, Environmental Service, Solid Waste, Central County Complex Internal Audit Department - Clerk of the Circuit Court and County Comptroller 2 of 14

6 APPENDIX A Fraud Awareness Opportunities To Enhance Fraud Awareness We have identified the following opportunities for responsible managers to enhance occupational fraud awareness and risk mitigation. We suggest that responsible managers: 1) Conduct a fraud risk assessment at least annually, documenting the process, results, specific risks identified and actions taken. Assessments should identify the most likely fraudulent activity and evaluate the likelihood that fraud will occur, the consequences should it occur and whether appropriate controls are in place to effectively prevent, detect, or mitigate the fraud risks identified. 2) Ensure all personnel have read and understand the Ethics (12.03) and Inappropriate and Prohibited Conduct (12.04) sections of Chapter XII Standards of Conduct, Sarasota County Human Resources Procedures, and are aware of their duty to report knowledge of fraudulent activity (Section 12.04, paragraph (2)). Ethics training should also be reinforced periodically. 3) Communicate management s commitment to zero tolerance towards fraud or reprisals for reporting suspicions of unethical or fraudulent activity. Ensure all personnel are aware of the protection provided by the Whistle-Blower Act (Sections , F.S) 4) Provide written reporting instructions and guidelines and encourage staff to report any concerns or suspicions of unethical behavior or fraudulent activity. Fraud risk issues and concerns and opportunities to enhance fraud awareness or the control environment were discussed with appropriate managers. The responsible managers concur and have taken or plan to take appropriate action by October 31, Management Interviews Summary We interviewed the Executive Director of Environmental Services, the General Manager, Solid Waste Management and the Manager of Solid Waste Operations, Central County Complex, Landfill Operations, to establish their level of fraud risk awareness, commitment to fraud prevention and detection, and efforts to assess fraud risk, implement controls and communicate an anti-fraud environment. Notable results included: The managers interviewed were aware of and identified specific fraud risks within their area of responsibility. Although each acknowledged that fraud opportunities may exist, they maintained it was not likely and were reasonably comfortable fraud was not being perpetrated. They also expressed confidence that if fraud were to occur, the perpetrator would not get away with it for long before it would be discovered and reported by staff. The managers were confident staff would report suspicions of fraudulent activity even though there were no department-specific reporting instructions or guidelines and staff had not been formally instructed of their duty to do so or advised there would be no reprisals for reporting such activity. Internal Audit Department - Clerk of the Circuit Court and County Comptroller 3 of 14

7 APPENDIX A Fraud Awareness Management has not conducted a formal assessment of fraud risk or the effectiveness of the control environment to prevent, detect and mitigate fraud risk. Management relies solely on Human Resource s new employee orientation to provide staff with an awareness and understanding of the County s Code of Ethics and employee conduct standards. Subsequent training has not been provided. Awareness Survey Summary To attain a general sense of the fraud awareness and prevention environment, ten supervisors and staff at the Central County Complex were surveyed using Resolver Ballot software. The participants included four Solid Waste inspectors and equipment operators, two administrative personnel, one OFP financial supervisor and three OFP financial specialists (scalehouse cashiers). A series of 25 fraud awareness and control environment statements was presented and the participants asked to anonymously vote their opinion to establish their level of agreement or disagreement. We concluded from the results of the survey that: all of the participants agreed that management and staff share responsibility for fraud prevention and detection. most of the participants agreed that they had read, received training and understand the County Code of Ethics and Employee Conduct standards the respondents generally agreed they would report being asked or told to do something they felt was unethical or fraudulent or if they knew or suspected fraud was being perpetrated in their department but were not all confident there would be no reprisals for doing so. there was less than full agreement that management has actually encouraged employees to report suspicions of fraudulent activity or provided instruction or guidelines on how to report. there was also some disagreement among the survey participants that if someone in the department did commit fraud, they would not get away with it, whether or not enough was being done within the department to prevent or detect fraud, and what should be done with employees who commit fraud. Responsible Management s Action Plan The results of the management interviews and the awareness survey indicate more can be done to raise fraud prevention awareness. Fraud risk issues and concerns, opportunities and action plans associated with fraud awareness and the control environment were discussed with appropriate managers. Responsible management concurs and plans to develop and conduct an annual, comprehensive fraud risk assessment within 12 months and implement action plans addressing all of the reported opportunities to enhance fraud awareness by October 31, 2009, including: Internal Audit Department - Clerk of the Circuit Court and County Comptroller 4 of 14

8 APPENDIX A Fraud Awareness Provide a means to communicate management s fraud awareness instructions and obtain staff certification of compliance. Instruct all personnel to read and certify, by signature, that they understand the Ethics and Inappropriate and Prohibited Conduct sections of Chapter XII Sarasota County Standards of Conduct, and are aware of their responsibility to report suspicions of fraudulent activity. Develop & distribute instructions and guidelines for reporting suspicions of unethical or fraudulent activity. Communicate management s zero tolerance for fraud or reprisals against anyone reporting suspicious activity. Encourage all personnel to report suspicions of unethical or fraudulent activity. Internal Audit Department - Clerk of the Circuit Court and County Comptroller 5 of 14

9 Fraud Prevention and Detection Survey Project Prevention and Detection Survey Summary APPENDIX B The same group of 10 supervisors and staff were surveyed using Resolver Ballot software to: gain a general sense of how occupational fraud prevention is perceived, establish the level of fraud prevention, detection, and mitigation control present at Central County Complex, Landfill Operations, and provide background data for evaluating program review and testing results. The participants were asked to evaluate a series of up to 40 statements describing occupational fraud prevention, detection, and mitigation best practices applicable to their duties and to anonymously rate: 1) The relative Importance of the issue or activity, from Not Important At All to Critically Important and 2) How Well the issue or activity has been addressed or applied, from Doing Everything Right to Not Doing Anything. 1) Importance The survey results indicate the respondents generally recognize the importance of effective fraud prevention control; only eight survey statements were rated lower than Very Important, with none less than Important. The survey statements rated highest for importance included: The best practice requiring cardholders to safeguard county VISA cards from unauthorized access and not share the cards with other employees was the only fraud prevention control activity rated Critically Important. Someone other than the traveler reviews travel expense reimbursement reports for accuracy, completeness, proper support, reasonable and necessary expenses and compliance. Provide cash handling, collection and deposit process training for all applicable employees. Written purchase, receiving, recording and inventory maintenance procedures, specific for the department are available for reference. 2) How Well Average survey responses indicate the participants rate the overall effectiveness of fraud prevention, detection and mitigation efforts as Doing Most Things Right, with only eight of the 40 statements rated as low as Doing A Few Things Right. The fraud prevention and detection controls rated most effective by the survey participants included: 1. Payroll expense reports are periodically reviewed, compared to budget and time records and unexpected variances documented, researched and analyzed. Internal Audit Department - Clerk of the Circuit Court and County Comptroller 6 of 14

10 Fraud Prevention and Detection Survey Project APPENDIX B 2. All personnel maintain a confidential, personal and unique Kronos payroll system password and input their own time record. Note: This control was also ranked fifth in importance. 3. Travel and training expense transactions and account balances are periodically analyzed and compared to budget. 4. A restrictive endorsement is placed immediately on all checks received from customers. The fraud prevention control best practices rated least effective by the survey participants, indicating potential opportunities for improvement, included: 1. Require supervisory authorization to void a collection transaction on a cash receipt or cashiering system. 2. Receivable invoices are prepared and mailed by someone other than the person responsible for receiving and recording payments. 3. Someone other than a cashier or a person responsible for preparing deposits opens the mail, records and distributes checks received to the cashiers. 4. Provide written departmental cash handling, collection and deposit processing procedures and controls for training and reference. Opportunities for enhancement were identified during subsequent program interviews, review and testing for each of these and other survey issues. (Reference Appendix C, pages 8-10, for details) Internal Audit Department - Clerk of the Circuit Court and County Comptroller 7 of 14

11 APPENDIX C Fraud Prevention, Detection and Risk Mitigation Opportunities To Enhance Fraud Prevention, Detection and Risk Mitigation The managers and staff of, Sarasota County Environmental Services have a reasonable awareness of occupational fraud risk and have implemented processes and controls to mitigate fraud risk and prevent or detect fraudulent activity. Notwithstanding the foregoing, opportunities exist to expand and enhance efforts to prevent and detect fraudulent activity and further mitigate occupational fraud risk. We suggest that responsible managers: 1) Develop comprehensive, written and location specific cash handling, deposit and collection processing procedures and control activities and provide necessary training and support to ensure consistency and compliance. Insure the written procedures include but are not limited to, collection receipting and recording, deposit preparation and processing, mail payments, void transactions, change funds and petty cash and accounts receivable billing, payment and records maintenance. 2) Revise collection and deposit procedures and controls to provide adequate separation of assigned responsibilities such that no one person has control of collections from receipt through deposit and someone other than the preparer review and agree deposits to daily collection records. 3) Amend commercial hauler deposit account and receivable record maintenance procedures and control activities to provide separation of responsibility for preparing receivable billings from payment receiving and recording functions. 4) Address and resolve an existing fraudulent collusion risk, whereby the spouse of a Central County Complex landfill scalehouse cashier periodically functions as a backup or substitute scalehouse cashier. As a result, both have access to collections and deposits, compromising separation of responsibilities and asset safeguarding controls. 5) Reinforce IT security policy requiring that user passwords be safeguarded against unauthorized access and not shared with other users. Issues, concerns and opportunities to enhance fraud prevention, detection and risk mitigation were discussed with appropriate managers. The responsible managers concur and have taken or plan to take appropriate action by October 31, 2009 Scope of Program Review and Testing In addition to the Resolver prevention and detection control survey, we conducted reviews and tests, and interviewed appropriate personnel, as necessary to assess the control environment and the adequacy and effectiveness of communication, monitoring efforts, Internal Audit Department - Clerk of the Circuit Court and County Comptroller 8 of 14

12 APPENDIX C Fraud Prevention, Detection and Risk Mitigation operating procedures and control activities to prevent, detect, and mitigate the potential for occupational fraud. The primary focus involved asset misappropriation fraud risk, including the potential for: cash theft and skimming (commercial hauler accounts receivable, revenue collection receipt, recording and deposit processing) fraudulent disbursements (petty cash and county procurement card purchases, travel expense reimbursement, payroll, cash register void transactions) theft and misuse of inventory (fixed assets, materials, fuel) unauthorized use or disclosure of data (commercial hauler accounts, landfill users) Program Review and Testing Results The following review and testing results reflect concerns and opportunities to enhance fraud prevention, detection and risk mitigation at : 1) Comprehensive, written and department specific cash handling, collection and deposit processing procedures and controls are not available for training and reference. a) While 40% of the survey respondents indicated that written procedures were not available and training not provided, the OFP Financial Supervisor reported that procedures were being revised and all scalehouse OFP Financial Specialist personnel (scalehouse cashiers) were provided training for the new landfill collection system. b) A record of checks received by mail is not maintained or reconciled to daily deposits. Mail is opened by the scalehouse cashier responsible for billing and processing commercial hauler accounts receivable payments and preparing collection deposits. c) Checks received by mail are not stamped with a restrictive endorsement immediately upon receipt. The cashier who opens the mail takes checks received to the scalehouse for recording, endorsement and deposit. d) Voided transactions do not require supervisory authorization and are not independently reviewed, verified or identified on daily collection system transaction reports. 2) Assignments do not provide effective separation of assigned collection receipting, recording and deposit responsibilities. Deposits are prepared by one of two cashiers receipting daily collections and are not subsequently reconciled by someone other than the preparer. a) Two of three scalehouse cashiers are on duty during landfill operating hours, Monday through Saturday, with lunch relief provided by the OFP Financial Supervisor. Cash and credit card payments are received, receipted and recorded Internal Audit Department - Clerk of the Circuit Court and County Comptroller 9 of 14

13 APPENDIX C Fraud Prevention, Detection and Risk Mitigation on the landfill collection system and each cashier agrees their collection totals to individual daily system receipt records. b) At the end of the day, one of two cashiers on duty prepares the daily deposits for cash and credit card collections receipted by both cashiers and any checks received by mail and recorded in the system. c) Completed daily deposits are not reviewed or agreed to collection system report totals by anyone other than the cashier responsible for maintaining commercial hauler account receivable records and regularly prepares at least one-third of the deposits. 3) Receivable billings on commercial hauler accounts are not prepared and mailed by someone other than the person responsible for receiving and posting receivable payments. a) One OFP cashier, in addition to scalehouse collection receipting and deposit duties, has assigned responsibility to: maintain commercial hauler deposit account and receivable records, prepare, record and mail receivable billings, open and distribute department mail, receive commercial hauler checks, post payments in commercial hauler receivable account records, and along with other cashiers, record the payments in the landfill collection system. b) This cashier also receives receipts and records scalehouse fees in the landfill collection system and prepares at least one-third of the daily deposits. 4) The spouse of the Central County Complex OFP cashier identified in Results paragraph 3) above, periodically works as a back-up or substitute scalehouse cashier (for vacations, illness, etc.) and is assigned as custodian of a $500 change fund at the Central County Complex landfill. This individual is an OFP Financial Specialist at the Solid Waste Cattlemen Road office. When related employees have access to collections, receivable payments, deposits and associated records, segregation of assigned responsibility and asset safeguarding controls are compromised and the risk of fraudulent collusion is significantly escalated. 5) Interviews with appropriate personnel indicate that IT security policy requiring user passwords be safeguarded against unauthorized access and not shared with other users is not followed consistently by department administration staff. Responsible Management s Action Plan Issues, concerns and opportunities to enhance fraud prevention, detection and risk mitigation were discussed with appropriate managers. With the exception of providing revised, written cash handling, collection and deposit procedures and controls, with planned completion and Internal Audit Department - Clerk of the Circuit Court and County Comptroller 10 of 14

14 APPENDIX C Fraud Prevention, Detection and Risk Mitigation implementation by October 31, 2009, the responsible managers have taken or planned to take appropriate action addressing all of the reported issues and opportunities by August 31, 2009, including: Procedures have been revised such that mail is received and opened, checks stamped with a restrictive endorsement and listed in a daily control record by someone other than the individual responsible for maintaining commercial hauler records, billing and payments. Daily commercial hauler payments will be recorded in the accounts receivable records by the OFP Financial Supervisor and the checks delivered to the cashiers not responsible for the receivable records for posting in the landfill collection system. Voided transaction reports are now provided by the landfill collection system and spot checked by the OFP Financial Supervisor. All collection transaction voids will be reviewed and approved by the supervisor. The scalehouse cashier that does not prepare the daily collection deposit will be required to agree the deposit total to landfill collection system and check posting records. Both the preparer and reviewer will initial or sign the Receipt For Deposit of County Funds forms. Daily collection deposits prepared by scalehouse cashiers will be reviewed for propriety and agreed to collection reports and records by the OFP Financial Supervisor. Procedures are being revised, as described above, so that the cashier responsible for maintaining commercial hauler account and receivable records and preparing, recording and mailing receivable billings will no longer be responsible receiving, recording or processing receivable payment checks. The assigned $500 change fund will be verified and turned in to Finance and the back-up cashier position eliminated. The OFP Financial Supervisor will provide backup cashier services as needed until an alternative can be evaluated and provided. Staff will be instructed not to share user passwords under any circumstances. County IT services will be contacted to provide limited or inquiry-only system or application access, as needed. Internal Audit Department - Clerk of the Circuit Court and County Comptroller 11 of 14

15 Occupational Fraud APPENDIX D Fraud is an intentional or deliberate unlawful, dishonest, or unethical act perpetrated in a deceptive manner, concealed or covered up and committed for the purpose of gaining an unauthorized advantage or personal benefit. Occupational fraud is the deliberate misuse or misapplication of the organization s resources or assets by an employee for personal enrichment. There are three generally recognized categories of occupational fraud: Corruption is fraud that involves collusion between a vendor, contractor, or other third party and employees who use their influence to procure undisclosed compensation or other personal benefit, contrary to their fiduciary duty to the County. Bribery is offering, giving, receiving, or accepting something of value to influence an official action or receive special consideration. Kickbacks (for purchasing considerations, unwarranted permits, favorable inspections, etc.) and bid rigging (an unfair advantage by tailored specifications, advance notice, access to other bids, etc.) are types of bribery. Conflict of Interest is an undisclosed economic or personal interest; involves selfdealing and breach of fiduciary duty. Fraudulent Statement schemes, financial and non-financial, are deliberate misrepresentations or falsifications of any account, report or record by misstatement, manipulation or omission of material information. Financial statement fraud, or cooking the books, usually involves overstating assets or revenues, understating liabilities or expenses, concealing over-budget conditions or using deceptive financial disclosures. Non-financial statement fraud can involve job applications, resumes, college degrees, professional certifications, or grant performance reports. Asset Misappropriation involves taking or using County property or cash without consent or authorization. Asset misappropriation is the most common type of occupational fraud, making up about 80% of all fraud reported nationwide. Asset misappropriation schemes represent the most significant fraud risk within the Sarasota County library system and the type of occupational fraud most likely to occur. There are three major categories of asset misappropriation; theft of cash, fraudulent disbursements and inventory and other non-cash asset schemes. Theft of Cash falls into two categories; 1) Larceny is theft of cash or check collections that have been receipted or recorded. 2) Skimming is theft of cash or checks before they are receipted or recorded. Fraudulent Disbursements involve employees making or causing an unauthorized distribution of county funds. There are five general types of fraudulent disbursement: Internal Audit Department - Clerk of the Circuit Court and County Comptroller 12 of 14

16 APPENDIX D Occupational Fraud 1) Billing and purchasing involves: a) Using fictitious or altered invoices to induce disbursement of county funds. b) Using County VISA procurement cards for personal or other unauthorized purchases that are not a reasonable and necessary expenditure of county funds. 2) Expense reimbursement involves reporting overstated, duplicate, mischaracterized, or fictitious expenditures on false documents (travel expense reports, petty cash vouchers, etc.) produced to induce disbursement of funds. 3) Check tampering is taking physical control of a check and fraudulently making it payable to the perpetrator by alteration or forged endorsement. 4) Cash register disbursement is taking cash by recording a false transaction (void, refund, etc.) on a cash register or collection system to make a fraudulent disbursement appear legitimate. 5) Payroll schemes involve altered or falsified time reports and records supporting overstated hours, falsified pay rates, hours improperly reported on former or nonexistent (ghost) employees, etc. Inventory and Other Non-cash Asset Schemes involve the theft, misuse, improper or unauthorized requisition, purchase, receipt, transfer, shipment, distribution or sale, concealment, or willful destruction of non-cash assets, for personal benefit or purpose, including: 1) computers, office equipment, fuel, other materials, parts, equipment or supplies. 2) citizen, commercial haulers, contractor data, employee personal, financial, insurance and medical information, financial records and reports, and other confidential or sensitive information. Management has the primary responsibility to develop, implement and maintain adequate and effective policies, procedures, and management controls for the prevention, detection and mitigation of occupational fraud. All employees, supervisors, and managers share responsibility to the organization for the prevention and detection of fraud. To help reduce fraud and fraud losses it is important that all employees: be familiar with the types of fraud that might occur within his or her area be aware of and alert for the warning signs or indicators (red flags) of potential fraud report suspected fraudulent activity. Internal Audit Department - Clerk of the Circuit Court and County Comptroller 13 of 14

17 Laws, Regulations, Rules and Policies Project APPENDIX E Chapter 112, Florida Statutes; Code of Ethics For Public Officers and Employees Section , F.S.; (the Whistle-Blower Act ), Adverse action against employee for disclosing information Section , F.S.; Confidentiality of information Sarasota County Human Resources Procedures Chapter XII Standards of Conduct Section Ethics Section Inappropriate and Prohibited Conduct, paragraphs 2, 7, 9, 15, and 16 Sarasota County Accounting Policies Chapter 9 Cash Receipts Chapter 17 Purchasing Chapter 18 Travel Internal Audit Department - Clerk of the Circuit Court and County Comptroller 14 of 14