Pacific Islands Regional Multi-Country Coordinating Mechanism (PIRMCCM)
Anti Fraud Policy
Annex 10
ANNEX 10 – PIRMCCM OPERATING PROCEDURES
MANAGING FINANCIAL IRREGULARITIES, MISAPPROPRIATION OR FRAUD
A.
Overview
This policy sets out the Pacific Islands Regional Multi-Country Coordinating Mechanism (PIRMCCM)
policy on fraud and misappropriation. It establishes the purpose, authority, and responsibility for
reporting and investigating suspected fraud and misappropriation of funds within the Multi-country
Western Pacific Grants of the PIRMCCM.
PIRMCCM members have a responsibility to report known or suspected financial irregularities to the
relevant authorities established in this policy. The PIRMCCM does not tolerate fraud and the concealment
of fraud.
B.
Coverage
This Policy applies to the following persons:
1.
2.
5.
Staff of the Joint Secretariat.
Staff of the Principal Recipient. However, in case of existing Principal Recipient anti-fraud policy
the Principal Recipient will adhere to that.
Grantees, to which the Principal Recipient has disbursed funds under grantee arrangementsi
Members of governing bodies overseeing funds to the Principal Recipient (PR) and the SubRecipients (SRs).
Any other persons providing services to the PR and the SRs.
C.
Definitions
3.
4.
For the purposes of this policy, unless otherwise stated, the following definition shall apply:
Fraud is defined as any dishonest act or omission that causes loss to PIRMCCM grants or results in an
unauthorized benefit or advantage, whether to the person’ acting or omitting or to a third party; and is
deliberate or reckless in relation to the harm caused or the benefit or advantage obtained.
Fraud includes, but is not limited to:
1.
Forgery or alteration of documents with a view of personal gain or gain for another, or intent to
cause loss to the PIRMCCM grants.
2.
Misappropriation of donor funds (including Global Fund MWP grants) funds and other assets.
3.
Deliberately altering or reporting incorrect financial or personal information.
4.
Seeking or accepting gifts from vendors, consultants or contractors doing business with the
PIRMCCM, PR and SRs, or
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5.
Unauthorized use of the PIRMCCM, PR and SRs property, equipment, materials or records for
personal advantage or gain.
D. Policy Guidelines
1.
The PIRMCCM values the integrity of its staff and members and relies on staff and members to act
at all times in an ethical and honest manner. It does not tolerate fraud and the concealment of fraud.
2.
All staff of the Secretariat, the PR and the SRs, and all PIRMCCM members, are expected to
immediately report known or suspected financial irregularities or fraudulent activity to the
PIRMCCM Secretariat.
3.
The PIRMCCM Secretariat will notify the Chair and Vice-Chair of the PIRMCCM, as appropriate,
of the suspected fraud. If the Chair and Vice-Chair of the PIRMCCM determine an investigation is
warranted, an investigation team will be formed. The process of this formation will be described in a
specific TOR once the first suspicion of fraud has been identified. This TOR will be used as a
guideline for any other cases in the future.
4.
All parties involved in the investigation must handle the matter with appropriate confidentiality and
objectivity.
5.
Every staff of the Secretariat, PR, SRs and any PIRMCCM member shall cooperate with
investigations in accordance with this Policy.
6.
Staff of the PIRMCCM Secretariat, PR, SRs and any PIRMCCM member shall not attempt to
investigate the suspected fraud or to discuss the matter with anyone other than as appropriate the
Chair and Vice-Chair of the PIRMCCM, or the officials conducting the investigation.
E.
Prevention and Detection
Whilst no internal control procedures can guarantee that fraud will not occur, PR (and with that the
PIRMCCM Secretariat as hosted by the PR) and SRs have their own established internal control systems
and procedures that will highlight irregular transactions. These internal control measures are included in
regulatory policies and processes that form Financial Regulations and the Finance Policies and
Procedures. The approach includes the proper segregation of duties, reconciliation procedures, random
checking of transactions, the review of exceptional management accounting information, conduct of
external audits.
Procedures
1.
Duty to Report
All suspected cases of irregularities, misappropriation, or fraud shall be reported immediately to
PIRMCCM Secretariat. Should a staff of the PIRMCCM Secretariat, PR or SR, or a member suspect their
immediate supervisor of participating in financial irregularities, they shall report the matter also to
PIRMCCM Secretariat.
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2.
Investigation
i.
When a charge is made against a PIRMCCM member, the PR, SRs of PIRMCCM Secretariat staff
member, the person and/ organization shall be furnished with a copy of the charge and shall be
directed to reply in writing, stating whether he/ she admits or denies the truth of the charge. The staff
member/ organization is to provide any explanation or rebuttal based on factual evidence in regards
to the charge. If a member/ organization does not make such a written reply within 21 days from the
date on which the letter of charge was delivered, the charge will be considered valid. The Chair or
Vice-Chair of the PIRMCCM may, where circumstances warrant, extend the final date for a written
response.
ii.
The investigation team will be responsible for collecting all relevant information in respect of the
fraud allegation.
iii.
Depending on the nature and seriousness of the alleged fraud, the Investigation Team may consult
with, or engage the services of, other persons (such as external auditors, the Police and the PR’s
Insurers).
iv.
The investigation team will have:
(a) unrestricted access to all records, and
(b) the authority to examine, copy, and/or remove all, or any portion of the contents of files, without
prior knowledge or consent of any individual who may use or have custody or any such items or
facilities, within the scope of the investigation.
iv.
If the investigation team concludes that the evidence it has collected does not support the allegation
of fraud, that outcome shall be reported confidentially to the individual who as suspected of fraud
and to the complainant. A confidential report will be provided to the Chair and Vice-Chair of the
PIRMCCM as appropriate that sets out the investigation process undertaken and the conclusions
reached. The disclosure of that report or any part of that report to any other person will be
determined by the Chair and Vice-Chair of the PIRMCCM.
v.
If the investigation team concludes that there is sufficient evidence to support the allegation, it will
provide the Chair and Vice-Chair of the PIRMCCM with a confidential report which includes a
recommended course of action and any recommended improvements to internal controls that are
identified as a result of the investigation.
3. Disciplinary Measures
Executive Committee of the PIRMCCM may apply any one combination of the following penalties that
are best appropriate to the seriousness of the offense:
-Official reprimand. Direct increased scrutiny of disbursements, expenditures and activities.
-Suspension of Grant. Disbursements, expenditures and activities to be frozen till further notice.
-Reimbursement of the total amount misused.
-Termination of the grant.
-PIRMCCM membership/ PIRMCCM Secretariat position/ PR/ SR retraction.
4. Remedial Measures/Action
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Where a suspected fraud is proven, PIRMCCM Executive Committee, with if required support of the PR,
will:
i.
Direct the manager of the area where the fraud has taken place, to put controls into place to mitigate
further losses and prevent reoccurrence of similar misconduct. Where these controls relate to finance
processes, the Head of Finance will put in place the necessary internal controls to prevent or reduce
the fraud from occurring in future.
ii.
Review the reasons for the incident, the measures taken to prevent a recurrence, and any action
needed to strengthen future responses to fraud;
iii. Advise PR’s insurers as appropriate (depending on the nature of the fraud)
iv.
Keep all other relevant stakeholders suitably informed about the incident and PIRMCCM response.
5. Recovery of Loss
The PIRMCCM, the PIRMCCM Secretariat, the PR and the SRs will take appropriate steps for the loss to
be recovered. The amount of loss is to be quantified and as far as possible, recompense is normally
sought.
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