POLICY ON FRAUD, MALPRACTICE AND IRREGULARITY

Transcription

1 POLICY ON FRAUD, MALPRACTICE AND IRREGULARITY Introduction This policy sets out the University s response to instances, or suspected instances, of fraud, malpractice and irregularity. Where appropriate, it should be read in conjunction with the University s Public Interest Disclosure Policy ( Whistleblowing Policy ) and Anti-Bribery Policy. 1. Aberystwyth University is committed to the highest standards of openness, probity and accountability. It seeks to conduct its affairs in a responsible manner taking into account the requirements of the funding bodies and standards in public life set out in the reports of the Nolan Committee as follows: Selflessness Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends. Integrity Holders of public office should not place themselves under any financial or other obligation to outside individuals or organizations that might influence them in the performance of their official duties. Objectivity In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit. Accountability Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office. Openness Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and actions and restrict information only when the wider public interest clearly demands it. Honesty Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest. Leadership Holders of public office should promote and support these principles by leadership and example. 2. The Public Interest Disclosure Act 1998, gives legal protection to employees against being dismissed or penalized by their employers as a result of publicly

2 disclosing certain concerns, which are both serious and likely to be of wider public interest. It is a fundamental term of every contract of employment that an employee will faithfully serve his or her employer and not disclose confidential information about the employer s affairs. However, where an individual discovers information which they believe shows malpractice/wrong-doing within the organization, then this information should be disclosed without fear of reprisal, and disclosure may be made independently of line management. The right to freedom of expression is a provision of the Human Rights Act Policy on Fraud, Malpractice and Irregularity 3. The policy on Fraud, Malpractice and Irregularity is consistent with the University s policy and procedures on Public Interest Disclosure. 3.1 Definition There is a clear distinction between fraud, malpractice and irregularity. The source for the definition of fraud is governed by The Fraud Act 2006 please refer to the link below: Fraud occurs at the point that any employee deliberately makes an incorrect entry in the accounts/records for personal gain (and/or loss by another) with the intention of depriving the University of property, whether permanently or temporarily. The gain (or loss) can be temporary as well as permanent. Dishonesty is crucial to establishing mens rea (intent to commit a wrong). Dishonestly obtaining services is also covered. Furthermore, the liability can be extended to a corporate body. Theft occurs when that property is physically misappropriated. The opportunity for fraud can be diminished by both individual and corporate vigilance. Malpractice covers both deliberate acts of commission and deliberate acts of omission. Although one cannot be prosecuted for malpractice, the University reserves the right to invoke its Disciplinary Procedure for staff who engage in malpractice. Irregularity normally refers to errors, which may be both errors of omission or commission. For example, an employee may omit entries from the accounts altogether and fail to carry out part of their duty e.g. the banking of cash. Errors of commission involve the making of incorrect entries in the accounts or the purposeful manipulation of student numbers, which may be errors of principle, clerical errors or compensating errors.

3 3.2 Responsibility for Prevention and Detection Responsibility for the prevention and detection of fraud and irregularity rests with the individual, first not to engage in it and second to draw it to their line-manager s attention when it is detected. In order to facilitate this, the University has in place a system of internal control. It is the responsibility of management to ensure the system of internal control remains effective and fit-for-purpose and hence reviewed regularly. Part of the internal auditors duty and responsibility is to review, appraise and report upon the extent of which the University s assets and interests are accounted for, and safeguarded from, issues of all kinds arising from: Fraud and other offences; Waste, extravagance and inefficient administration; Poor value for money or other cause. This role is carried out by identifying any serious defect in the system of internal control which might lead to the perpetration of fraud. Where the internal auditor suspects that a fraud has been committed they should notify the Head of Department and other appropriate senior managers, and also the PVC for Student and Staff Services. The external auditor considers the possibility of fraud when evaluating internal control procedures and in performing substantive tests. If there is a suspicion of fraud they can discharge their duty by notifying the appropriate responsible officer, the Treasurer and the Vice-Chancellor as Accounting Officer. It is a fact that most frauds committed do not come to light as a result of work done by internal or external audit. Where a member of staff has a reason to believe that fraud, malpractice or irregularity has taken place they should immediately report this to their Head of Department or, where this is not appropriate, to the PVC for Student and Staff Services. 3.3 Procedures Individuals wishing to make a disclosure should do so in writing to the person designated under the Public Interest Disclosure Policy. Where Heads of Department become aware of a breach or suspected breach of Financial Regulations they should inform the PVC for Student and Staff Services in writing. The PVC for Student and Staff Services will consider the information made available and will decide on the form of investigation to be undertaken. This may be: To refer the matter to the police

4 To instigate an internal review, and to determine the means by which such a review is to be conducted, either by the engagement of the University s internal auditors or otherwise. To refer the matter to the Vice-Chancellor, as the University s Accounting Officer. 3.4 Investigation In all cases of suspected fraud, the police should be contacted. There is an obligation under the Criminal Law Act 1976 not to impede prosecution without reasonable excuse, and failure to notify the police may invalidate an insurance claim for losses incurred. Where preliminary investigation is conducted internally by officers of the University or by the internal auditors, they should be fully trained in the requirements of the Code of Practice (Code C) issued by the Home Officer under powers granted by section 66 of the Police and Criminal Evidence Act When an internal investigation has been completed, a written report will be given to the PVC for Student and Staff Services. Should the incident concern the PVC for Student and Staff Services, the report will be given to another PVC. The report should include, when appropriate, recommendations to facilitate the prevention of any re-occurrence of the incident. The PVC will decide appropriate follow-up action. This may include referral to the police or internal disciplinary procedures. 3.5 Reporting The PVC will ensure that the Vice-Chancellor, the Treasurer and the Chair of the Audit and Risk Committee are informed of the investigations that have commenced and kept informed throughout the investigation process, including the outcome of the investigation and the proposed course of action. The outcome report will be distributed to the Vice-Chancellor, Chair of the Audit and Risk Committee and Treasurer. Where the investigation reveals a serious weakness, significant fraud or major accounting breakdown, the President, as Chair of Council, and the HEFCW Accounting Officer must also be informed. HEFCW define a serious weakness as one that has resulted in an attempted, suspected or actual significant fraud or irregularity. Significant fraud is usually where one or more of the following applies: The sums of money involved are, or potentially are, in excess of 20,000; The particulars of the fraud are novel, unusual or complex; There is likely to be public interest because of the nature of the fraud or the people involved.

5 A report on the investigation will be presented to the Audit and Risk Committee 3.6 Recovering a loss The PVC, in consultation with the Director of Finance, will determine whether to seek to recover any loss which may be covered by insurance. Alternatively, it may be decided to seek recovery through the courts. 3.7 Annual Review The Audit and Risk Committee, copied to the Treasurer, will receive an annual report of all incidents reported even if there are none identified. The policy on Fraud, Malpractice and Irregularity will be subject to review at intervals of not more than two years. 3.8 Other Related Policies Nothing in this policy shall be taken to override or supersede the University s policy set out in its Whistleblowing (Public Interest Disclosure) Policy. This document is one of a series that constitute the policies of the University in relation to fraud, malpractice and irregularity. The other documents are: Financial Regulations; Whistleblowing Policy; Disciplinary Policy; Anti-Bribery Policy; and Gifts & Hospitality Policy JD 3/11