APPENDIX H:
FRAUD POLICY
(Paragraph 12.20)
Purpose
1. The purpose of this Statement is to supplement the guidance
given at paragraph 12.20 by setting out the policy of the House
towards the prevention and detection of fraud and the procedures
to be followed if fraud is detected or suspected.
Definition
2. No precise legal definition of fraud exists. In the public
service, the term is used to describe such acts as deception,
bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement,
misappropriation, false representation, concealment of material
facts and collusion. For practical purposes fraud may be defined
as the use of deception with the intention of obtaining an unfair
advantage, avoiding an obligation or causing loss to another party.
Attempted fraud is as serious an offence as accomplished fraud
and all references to fraud in this Statement should be deemed
to include attempted fraud. Fraud can be perpetrated by persons
both inside and outside the organisation (e.g. by staff or by
clients/contractors).
Policy
3. Fraud of any type represents a threat to the good name and
standing of the House of Lords and to the public resources for
which it is responsible. The policy therefore is:
to promote awareness among staff of the risk of fraud;
to establish and maintain controls aimed at preventing
and detecting fraud; and
to take effective action whenever fraud is discovered
or suspected.
Responsibilities of management
4. Heads of Office, in conjunction with the Establishment Officer,
are responsible for:
(a) ensuring that their staff are aware of the risks of fraud
and of the responsibilities of individuals with regard to the
prevention and detection of fraud;
(b) identifying risks to which systems and procedures
may be exposed;
(c) developing and maintaining appropriate controls to
manage such risks and ensuring that they are complied with;
and
(d) investigating immediately any actual or suspected
cases of fraud or, where appropriate, seeking guidance as to
how such an investigation might best be conducted.
5. A Treasury guide for managers "Managing the Risk of Fraud"
is available on request from the Establishment Officer or the
Internal Auditor.
Responsibilities of staff
6. All members of staff have a duty to:
(a) act honestly and with integrity at all times;
(b) not to accept gifts, hospitality or benefits which
might be seen to compromise their judgment or integrity;
(c) comply with controls and seek to safeguard the public
funds for which they are responsible;
(d) take special care when handling receipts and payments
and dealing with contractors and suppliers
(e) report immediately to an appropriate senior officer
any actual or suspected act of fraud which they discover; or
alternatively, report the matter in confidence to the Internal
Auditor who will protect anonymity where possible, and
(f) seek clarification from an appropriate senior officer
on any issue where propriety is uncertain or ambiguous.
Procedures
7. Heads of Offices should investigate any act or suspected
act of fraud reported to them. If a prima facie case of fraud
is established, they should report it to the Establishment Officer,
who will determine:
the nature of any further investigation
whether or not the Police should be involved
what, if any, legal and/or disciplinary action
should be taken; and
the action to be taken to recover whatever losses
may have occurred.
8. Heads of Offices should also report cases of fraud to the
Internal Auditor, who will record in a register the circumstances,
decisions and action taken in each case. This register will form
the basis of an annual return to the Treasury of cases of fraud
arising from within the administration of the House or from contractors
or other persons providing a service to the House.
Disciplinary action
9. Where a member of staff is found to have perpetrated a fraud,
the Establishment Officer will reserve the right to refer the
matter to the Police, who may then wish to take criminal proceedings.
Whether or not the matter is referred to the Police, disciplinary
action may be taken against the member of staff concerned.
Learning from experience
10. Where an instance of fraud has occurred, management must
consider what changes need to be made to systems and procedures
to ensure that such frauds do not recur. The advice of the Internal
Auditor should be sought and any agreed changes should be put
into practice.
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