1.0
2.0
3.0
4.0
5.0
6.0
7.0
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1.0 PREAMBLE
1.1
This Policy Paper has been updated by Transport for NSW to provide policy advice to organisations funded through the Home and
Community Care (HACC) Community Transport Sub-program and the
NSW Community Transport Program (CTP) about dealing with fraud and corruption.
Guidelines are also included in this Paper for the purpose of providing practical directions on how policy will be applied in future by Transport for NSW staff.
2.0 CONTEXT
2.1
Transport for NSW provides funding to a range of community transport organisations. These include independent community based organisations, local government authorities and other statutory authorities.
2.2
Transport for NSW has recently developed an internal Fraud and
Corruption Prevention Strategy. This document sets out the prevention strategies the Department has in place to minimise the risk of fraud and corruption occurring. It is important that community transport organisations also have a fraud prevention strategy in place to minimise the risk of fraud and corruption occurring within community transport organisations.
2.4 These procedures are not designed to replace procedures that are required to be adopted by other outside authorities (eg. Department’s of
Local Government financial standards for local Councils, Treasury
Directions for Statutory Authorities).
3.0 CAUSES OF FRAUD AND CORRUPTION
3.1
Fraud and corruption are usually caused through either a lack of financial and internal controls by an organisation or the breakdown of these controls.
3.2
Fraud and corruption can result in the divergence of scarce public monies and resources from their intended purposes. When it occurs it can affect the reputation of the community transport organisation and the Ministry of Transport.
3.3
Fraud and corruption can be undertaken by both paid and unpaid staff.
Therefore, procedures need to be in place to reduce these risks and need to be regularly reviewed.
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3.4
Organisations which have dealt with fraud or corruption have highlighted to the Ministry the following methods used: a) falsification of invoices; b) falsification of cheque requisitions; c) payment of unrelated expenditure, usually of a personal nature; d) falsification of timesheets and/or other allowances; e) falsification of receipts; and f) use of organisation’s resources for persons gain/use (eg vehicle, petrol, misuse of credit or debit cards).
4.0 FRAUD AND CORRUPTION PREVENTION
4.1
Organisations need to have mechanisms to in place reduce the chances of fraud and corruption occurring. All paid and unpaid staff and committee members need to be aware of these.
4.2
Organisations can conduct a fraud control health check to assess the risk of fraud, gauge the awareness of staff of fraud control and identify areas where work needs addressing.
4.3
More information on conducting a fraud control health check can be obtained from
www.audit.nsw.gov.au/publications/better_practice/better_practice.htm
A fraud control health check has been developed by Transport for NSW
A copy can be provided by LACT staff on request to interested organisations.
4.4 While a fraud control health check is not a requirement of the Integrated
Monitoring Framework (IMF), evidence that an organisation has checked for fraud control may be presented at the IMF Review.
5.0 PROCEDURES FOR RESOLVING FRAUD AND CORRUPTION
5.1
Once allegations of fraud or corruption have been raised the organisation needs to act quickly.
5.2
The allegations or signs of fraud and corruption can come from a number of sources. These can include: a) unexplained variations to the organisation ’s financial position or procedures; b) allegations both of a verbal or written nature from staff, committee members, clients or other concerned individuals regarding apparent inconsistencies in the financial aspects and procedures of the organisation.
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5.3
All allegations need to be formally investigated. Depending on the serious nature or number of allegations this may include an independent investigation by the organisation’s auditor or similar.
5.4
The LACT Branch needs to be formally advised about all investigations and their outcomes.
5.5
Should any evidence of fraudulent activity be uncovered, the organisation is required to report the matter to the Police.
5.6
While a matter has been reported to the Police the organisation should also seek recovery of funds from the person or persons concerned.
5.7
If substantial funds have been misappropriated the organisation should seek legal advice as to how to formally recover these funds. This is usually achieved through the organisation’s solicitor writing a letter of demand to the person or persons.
5.8 The Department encourages organisations to resolve these matters as quickly as possible as adverse publicity may affect the provision of services to clients.
5.9 If in the view of the Department, any allegations are of a serious nature and the organisation is unwilling or unable to resolve these issues,
Transport for NSW retains the right to undertake an independent review of the organisation through the use of its own staff or auditors.
5.10
The Management Committee of the organisation is to ensure that funds are expended in accordance with conditions of funding and in accordance with generally accepted accounting standards.
6.0 CHECKLIST FOR RESPONDING TO ALLEGATIONS OF FRAUD a) Suspicion leading to a formal allegation. b) Advise the Department in writing of allegations. c) Investigation needs to be done in an appropriate manner to identify burden of proof. The investigation can occur:
- in house
-
- by an auditor by an external person d) If allegation is proven:
- refer to Police
- seek recovery of funds, revise relevant policies or rectify situation
-
- advise the Department advise person who made allegation
If the allegation is not proven:
- advise person who made allegation
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advise the Department
7.0 RESOURCES a) NSW Audit Office. Better Practice Guide - Fraud Control Improvement Kit
(July 2006) b) Transport for NSW - Fraud and Corruption Prevention Strategy (October
2007) c) A proforma for the reporting of fraud and corruption has been developed by Transport for NSW and is shown below. This can be adapted and used by Community Transport organisations.
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To:
From:
Date :
FRAUD INCIDENT REPORT
Organisation
Date case reported
How fraud was identified (including contact details if appropriate)
Incident Details
Estimated Funds involved
Action taken to date (including advice on any action to recover monies and notification to police)
Name:
Signed:
Position:
Current status
Director
Ext.
NOTED
Instructions
1. Signed by relevant Director or equivalent
2. Sent to the Executive Director, Transport Services Group
3. The template may be used for initial notification and updating earlier advice
4. The information provided is to remain Confidential
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