Presentation
CIFAL PRESENTATION
Date: 13 JUNE 2012
Place : Durban
Ugu District Municipality
Whistle Blow and Fraud
Presentation
AGENDA
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Introduction
Definition of Fraud
Fraud Triangle
Definition of Corruption
Types of Fraud and Corruption
Dealing with Fraud
Fraud Red Flags
Legal Framework
Protected disclosure Act
Questions
Introduction and Fraud
Definition
Introduction
The purpose of this presentation is to provide Ugu District Municipality
employees and other stakeholders with the essential information regarding
Ugu District Municipality anti-corruption campaign.
Definition of Fraud
Fraud is an unlawful and intentional making of misrepresentation
which cause actual or and potential prejudice to another person.
Fraud Triangle
Opportunity
Pressure
Rationalisation
Definition of Corruption
Definition of Corruption
Corruption is a conduct or behaviour where a person accepts or agree
or offers any gratification for him/herself or for another person where
the purpose is to act dishonestly or illegally.
Examples of Corruption
Bribery
Extortion
Abuse of power
Conflict of interest
Favouritism
Nepotism
Favouritism etc.
Dealing with Fraud
Preventative
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Fraud Risk Assessment
Internal Control
Fraud Awareness Training
Fraud Hotline
Fraud Prevention plan
Pre-employment Screening
Management Commitment
Dealing with fraud (continue)
Fraud Detection
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Internal Audit
External Audit
Incident/Exception Reports
Whistle Blower
Fraud Response
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Investigation
Reviewing of system and procedure
Disciplinary Hearing
Asset Recovery
Providing Information to third parties
Fraud Red Flags
Employees Red Flag
Employees lifestyle changes: expensive cars, jeweleries etc
Significant personal debt and credit problem
Behavioral changes: drugs, alcohol etc
Refusal to take vacation leave
Lack of segregation of duties
Management Red Flag
Reluctance to provide information
Management engage in frequent dispute with auditors
Management decision are dominant by individual and small group
Weak internal control
Decentralization without adequate control
Frequent change of External Auditors
Company assets sold under market value
Continuous rollover of Loans
Red Flags (continue …)
Payroll
Inconsistence overtime hours worked
Overtime charged during a slack period
Overtime charged for employees who normally do not worked overtime
Payroll budget variation
Employees with statutory deduction only
Purchasing
Lack of physical security
Vendors without physical address
Purchases that bypass normal procurement procedures
High purchase from new vendor
Purchases from vendors who are not on approved list
Red Flags (continue)
Change in Behavior
Borrowing money from co-workers
Gambling beyond the ability to stand the loss
Excessive drinking
Providing unreasonable response
Carrying unusual some of money
Creditors or collectors appearing at the work place
Cash or Accounts Receivable
Excessive number of void transaction
Unauthorised Bank Account
Discrepancies between bank deposits and posting
Other Fraud Signals
Supporting document not found when requested
Using of duplicate invoice
Usage of pro forma invoice
Cash Lobbing
Increase in customer complaints
Cancellation of cash transaction
Criminal records
Failure to discipline violators
IT SHOULD BE NOTED THAT RED FLAGS ARE WARNINGS THAT
SOMETHING WRONG COULD TAKE PLACE. LITLE FRAUD
SOON BECOME LARGE.
Legal Framework
Corruption Act, 94 of 1992.
Protected Disclosure Act.
Code of Conduct.
Anti-Fraud and Corruption Policy of Ugu District Municipality.
Access to Information Act.
Corporate Governance.
Aunt-Money Laundering Act.
Financial Intelligent Centre Act.
MFMA.
PFMA
KING 3
Protected Disclosure Act
The protected Disclosure Act,26 0f 200 makes provision for the
protection of employees who make a disclosure that is protected in
terms of this act. Any disclosure made in good faith and sustainably in
accordance with any procedure prescribed by the employee’s employer
for reporting is considered a protected disclosure under this Act. An
employee making protected disclosure is protected from victimisation.
It should be noted that this Act does not protect false disclosure.
Thank You