(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.