© 2007 Nan McKay & Associates
Ethics
Cara Gillette
Slide Number #1
© 2007 Nan McKay & Associates
© 2007 Nan McKay & Associates
Introduction
 What we’ll cover:
 Ethical decision-making
 Principles of personal and business ethics
 Procurement ethics
 Policies that support ethical decisions in the
workplace
October 2007
Ethics
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© 2007 Nan McKay & Associates
Your Ethical Role
 As public housing
officials, we are
stewards of the public
trust
 Keep in mind that HUD
views ethics violations
as a serious crime
October 2007
Ethics
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© 2007 Nan McKay & Associates
What Is Ethics?
 It’s knowing right from wrong
Ethical path not always easy one
 There are serious problems in today’s
business world
Preserving reputation is important
 Yours and the housing authority’s
October 2007
Ethics
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© 2007 Nan McKay & Associates
Your Challenge
 The first challenge is knowing the “right
thing” to do
 Ignorance of the law is not an excuse
 You need to consider not only the letter, but
also the spirit of the law
 Chances are if it feels wrong, there’s a good
chance it is!
October 2007
Ethics
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© 2007 Nan McKay & Associates
Your Challenge
 The next challenge is doing what’s right
 Avoid personal temptations – the “big stuff”
makes the news, but the day-to-day behaviors
represent the largest arena for breach in
ethics
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Ethics
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© 2007 Nan McKay & Associates
Your Challenge
 The “three R’s” to remember:
 Respect – people, PHA and your work
 Responsibility—customers, coworkers, PHA,
yourself
 Results—consider how something is done
as well as what
October 2007
Ethics
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© 2007 Nan McKay & Associates
Your Challenge
 Day-to-day breaches of ethics:
 Falsifying time sheets
 Office supplies that end up at home
 Not taking responsibility when you make a
mistake
 Reporting sick while out shopping
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethical Decision Making
 Guidance can be found in:
 HUD handbooks
 Housing authority policies
 Professional codes of ethics
 Laws
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethical Decision Making
 Some questions to ask:
 Does it violate housing authority policy?
 Admin Plan or ACOP
 PHA personnel policy
 PHA fraud and ethics policies
 PHA procurement policy
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethical Decision Making
 Some questions to ask:
 Does it violate professional codes of ethics?
 Does it violate the Golden Rule?
 Are there “shushers”?
 If someone is pressuring you keep it
secret and not talk about it, chances are
it’s unethical
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethical Decision Making
 Some questions to ask:
 Does it pass the Mom Test?
 Does it pass the TV Test?
 Are any person’s, the PHA’s, or another
entity’s rights abridged or violated?
 The right to know, the right to privacy, the
right to property
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethical Decision Making
 Some questions to ask:
 Are any duties or responsibilities not met?
 What if everyone did this?
 Does it minimize actual or potential harm?
 Look again at an ethical decision before
acting
October 2007
Ethics
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© 2007 Nan McKay & Associates
Principles of Personal Ethics
 Ethics is personal because it comes down
to you, your conscience, and your
behaviors and decisions
 Willing compliance with the law
 Basic justice – being fair – and refusing to
take unfair advantage
 Impartiality – objectivity
October 2007
Ethics
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© 2007 Nan McKay & Associates
Principles of Personal Ethics
 Ethics is personal
 Openness – full disclosure
 Confidentiality
 Due diligence – duty of care
 Fidelity to personal responsibilities
 Avoiding potential or apparent conflict of
interest
October 2007
Ethics
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© 2007 Nan McKay & Associates
Principles of Personal Ethics
 In short, doing good and preventing harm
is the essence of ethical behavior
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Ethics
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© 2007 Nan McKay & Associates
Principles of Personal Ethics
 Ethics determines your professional
duties:
 Appropriate professional relations
 Actions that produce desired outcomes
 Confidentiality
 Impartiality
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Ethics
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© 2007 Nan McKay & Associates
Case Study #1
 You are the waiting list supervisor
 While attending a college prep meeting at your
son’s high school, the principal, who needs to
write your son a recommendation, asks you
about her recently divorced daughter who
recently applied for Section 8 assistance
 How would you handle this?
October 2007
Ethics
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© 2007 Nan McKay & Associates
Ethics: It’s A Personal Decision
It comes down to you: Are you willing to:
 Comply with laws
 Adhere to personal
responsibility
 Avoid conflict of interest
Be objective
situations
Disclose dishonesty
 Exhibit concern and
Maintain confidentiality
respect for others
Do your duty
 Be honest
 Be fair




October 2007
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© 2007 Nan McKay & Associates
Ethical Checklist
 Appendix 1 gives you a
good checklist for making
ethical decisions
October 2007
Ethics
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© 2007 Nan McKay & Associates
Business Ethics
 Attention to business ethics is critical in
times of fundamental change
 Values that were previously taken for granted
are now strongly questioned
 Attention to ethics is a moral compass and
sensitizes leaders and staff as to how they
should act
October 2007
Ethics
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© 2007 Nan McKay & Associates
Business Ethics
 Managerial conduct:
 You have the responsibility to not support
unethical behavior, including:
 Illegal activity
 Illegal practices
 Unethical practices
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Ethics
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© 2007 Nan McKay & Associates
Business Ethics
 PHA policies should give clear instruction
on how to deal with persons and agencies
who participate in:
 Wrongful use of resources
 Mismanagement of contracts
 Conflicts of interest
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Ethics
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© 2007 Nan McKay & Associates
Business Ethics
 Part of management in PHA
 PHA need to strive for a more positive public
image
 PHA’s policies should provide clear and
detailed guidance on ethics
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Ethics
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© 2007 Nan McKay & Associates
Myths about Business Ethics
 1. Business ethics is more a matter of religion
than management
 Not trying to change values—managing decisions
and behavior is the goal
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Ethics
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© 2007 Nan McKay & Associates
Myths about Business Ethics
 2. Employees are ethical so we don’t need
attention to business ethics
 Ethic dilemmas are complex
 Many ‘gray areas’
 3. Business ethics is an academic or religious
discipline
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Ethics
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© 2007 Nan McKay & Associates
Myths about Business Ethics
 4. Business ethics is about the obvious: Do
good!
 More than just being honest
 Code of Ethics provide priority and focus
regarding workplace issues
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Ethics
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© 2007 Nan McKay & Associates
Myths about Business Ethics
 5. Ethics is the good guys preaching to
the bad guys
 Good people can make bad decisions
 6. Ethics can’t be managed
 7. Our PHA is not in trouble so we must
be ethical
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Ethics
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© 2007 Nan McKay & Associates
How Do We Benefit From Ethics In The
Workplace?
 Laws now protect workers from abuse and
discrimination
 Anti-trust laws protect consumers
 Promotes openness, dialogue and honesty
 Promotes confidence in our work
environment
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Ethics
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© 2007 Nan McKay & Associates
How Do We Benefit From Ethics In The
Workplace?
 Ethics policies are an insurance policy—
help ensure policies are legal
 Allows PHA to detect ethics issues early on
 Portrays a strong positive image to the
public
 Legitimizes management actions
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Ethics
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© 2007 Nan McKay & Associates
Ethical Dilemmas
 Sometimes there isn’t one clear choice
 Ethical dilemmas faced by managers are
often more real-life and highly complex with
no clear guidelines, whether in law or policy
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Ethics
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© 2007 Nan McKay & Associates
Ethical Dilemmas
 You know you have a significant ethical
conflict when there is presence of:
 Significant value conflicts among differing
interests
 Real alternatives that are equally justifiable;
and
 Significant consequences to stakeholders
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Ethics
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© 2007 Nan McKay & Associates
Ethical Dilemmas
 An ethical dilemma exists when you’re
faced with having to make a choice among
these alternatives
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Ethics
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© 2007 Nan McKay & Associates
Ethical Dilemma #1
 Your boss told you that one of your employees
is soon to be laid off, and that you’re not to tell
your employee yet – he might tell the whole PHA
and get everyone in an uproar
 Meanwhile, you heard from your employee that
he plans to buy a new car and remodel his house
 What should you do?
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Ethics
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© 2007 Nan McKay & Associates
Ethical Dilemma #2
 A colleague told you that she plans to quit the
company in two months to take a new job offer
 Meanwhile, your boss told you that you didn’t
get a promotion because he’s going to give the
promotion to your colleague (above)
 What should you do?
October 2007
Ethics
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© 2007 Nan McKay & Associates
Procurement Ethics
October 2007
Ethics
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© 2007 Nan McKay & Associates
Important Terms
 Mandatory vs. optional references
 ‘Shall’ and ‘must’ are mandatory in regs,
handbooks or law
 ‘Should’ or ‘may’ are guidance and not
required
 PHAs needs to establish policies
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Ethics
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© 2007 Nan McKay & Associates
Procurement Laws and Regulations
 Procurement is acquiring goods and
services using federal funds
 Procurement policy must be compliant with
the following mandatory references:
 Part 85 CFR
 Handbook 7460.8
 State or local law
October 2007
Ethics
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© 2007 Nan McKay & Associates
Procurement Laws and Regulations
 Part 85 ‘The Common Rule’ has requirements for
all entities receiving federal funds and provides
guidance on:
 Development of procurement policy and system
 Important parts of contract administrative system
 General guidance for PHAs for standard of conduct
 Requirements for price and cost analysis
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Ethics
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© 2007 Nan McKay & Associates
Procurement
 HUD Procurement Handbook 7460.8 REV 2
(revised March 2007)
 Provides guidance on asset management
and project-based management
 Does not apply to Indian HAs or HCV
 Fees for COCC not subject to handbook
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Ethics
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© 2007 Nan McKay & Associates
Procurement
 Chapter 4 of the new HUD Handbook
7460.8 REV 2 deals directly with the need
to set ethical standards for procurement
 Appendix 2
 We will deal with ethics as it applies
throughout the procurement process
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Ethics
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© 2007 Nan McKay & Associates
Basics Of Procurement
 Setting the limits
 Determining who is authorized to make
purchases
 Distinctions between goods and services
 Construction
 Contract management
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Ethics
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© 2007 Nan McKay & Associates
State or Local Law
 PHAs must comply with state or local
laws re: procurement
 Some states have more stringent laws
 PHAs must comply with the stricter law
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Ethics
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© 2007 Nan McKay & Associates
Public Access to Procurement
Information
 Certain procurement information should
be made public according to state laws
 Other information is sometimes protected
from disclosure and should not be made
public
 PHAs should exercise caution!
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Ethics
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© 2007 Nan McKay & Associates
Public Access to Procurement
Information
 Many states have enacted FOI laws
 Could vary from state to state
 PHA’s procurement policy must
incorporate the state law
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Ethics
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© 2007 Nan McKay & Associates
Procurement and Good Business
 PHA’s goal should satisfy end users in
terms of cost, quality and timeliness while
complying with HUD regs and policies
 Should exercise personal initiative and
sound judgment
 When there are doubts, officers should
seek advice
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Ethics
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© 2007 Nan McKay & Associates
Procurement and Good Business
 Policy must state who has authority to
purchase, what amount, and what approval
is required
 This may change in the transition to project-
based management
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Ethics
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© 2007 Nan McKay & Associates
Procurement Policy
 Sets standards for
purchases
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Ethics
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Example Procurement Policy
Purchase Purchase Procurement Method
Amount Authority
Less than Site
$50
Manager
$50-$2,000 Site
Manager
$2,000 Regional
$100,000
Manager
Over
$100,000
October 2007
Asset
Manager
Ethics
Petty cash. Receipts required and must be
logged. Submitted to Regional Manager
Micropurchase. 1 reasonable price quote.
Purchases should be equally distributed
3 quotes (Fax, written, or email). Oral only
for building materials & supplies not
services. Purchases equally distributed.
Formal advertisement and sealed bid.
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© 2007 Nan McKay & Associates
Contracting Officer
 The contracting officer acquires supplies,
services and construction needed by PHA
 Signs contracts, PO’s, agreements
 At many PHAs, procurement authority is being
“drilled down” to the site
 Imperative that property managers with
procurement authority understand the rules
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Ethics
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© 2007 Nan McKay & Associates
Contracting Officer
 Contracting officer can be centralized,
decentralized, or a mix (both at the project
with the head officer at the COCC)
 Analyzes bids/proposals
 Detects contract irregularities
 Ratifies unauthorized commitments with
justification
October 2007
Ethics
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© 2007 Nan McKay & Associates
Contracting Officer
 Contracts must comply with…
 HUD regulations
 Procurement policy of PHA
 State or local laws
 Signature of contracting officer establishes
PHA legal commitment
October 2007
Ethics
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© 2007 Nan McKay & Associates
Important Point
 Separation of duties and functions
 PHAs should ensure that the person who
places purchase orders does not also
“receive” the items purchased
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Ethics
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© 2007 Nan McKay & Associates
Important Point
 Records on each
procurement must
be maintained for at
least three years
October 2007
Ethics
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© 2007 Nan McKay & Associates
The Connection Between
Procurement & Ethics
 Simply stated, decisions made to purchase
goods and services for the agency must be
in the best interest of the agency
 Each decision must be made without
outside influence
October 2007
Ethics
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© 2007 Nan McKay & Associates
The Connection Between
Procurement & Ethics
 Keeping ethics on the front burner in all
procurement activities means that
everyone understands the PHA
procurement policy, what it means, the
terms, and the consequences of
noncompliance
October 2007
Ethics
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© 2007 Nan McKay & Associates
Important Terms
 We’ll go through some of the
important terms used in
procurement and contract
management
 Anyone purchasing goods or
services needs to understand
these terms
October 2007
Ethics
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© 2007 Nan McKay & Associates
Circumventing Purchasing
Authority
 Sanctions must be imposed for
circumventing this authority
October 2007
Ethics
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© 2007 Nan McKay & Associates
Conflict Of Interest
 Simply stated, we
must avoid
conflicts of interest,
real or perceived
October 2007
Ethics
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© 2007 Nan McKay & Associates
Conflict Of Interest, What Is It?
 A conflict of interest
occurs when a PHA
employee, officer, or
agent, or member of their
family, stands to gain
financially or otherwise,
from a decision made by
the PHA
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Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest
 PHAs must adhere to conflict of interest
prohibitions:
 No PHA employee, officer, or agent shall
participate in a contract if a conflict of
interest, financial or otherwise, real or
apparent, would be involved
 Includes family, partners and organizations
October 2007
Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest
 Neither the PHA, contractors or subcontractors
may enter into any contract or connection with
PHA during their tenure or 1 year after:
 Board members of PHA (present or former) or
their immediate family
 Present and former tenant commissioners are
excepted from this provision not serving on a
resident corporation and do not make policy…
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Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest
 PHA employees who formulate policy or who
influence decisions with respect to the project(s),
or their immediate family or their partner
 Public officials, member of local government, or
state or local legislator, or their immediate family,
who exercise functions or responsibilities with
respect to the project(s) of the PHA
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Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest - Example
 Joan Johnson, a board member, is the
parent of Dwayne Johnson, who is applying
to be the PHA’s public housing facilities
director
October 2007
Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest - Example
 A former board member, Charles Conrad,
whose tenure ended less than a year ago,
enters into a contract with the PHA to
provide consulting services
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Ethics
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© 2007 Nan McKay & Associates
Conflict of Interest - Example
 A PHA employee, Dawn Shimoda, is
seeking election to the city council, which
exercises authority over PHA operations
 Employees may seek election but if elected
may have to resign
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Ethics
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© 2007 Nan McKay & Associates
Conflict Of Interest
 Let’s take a moment
to look at some
samples that HUD put
together as
illustrations of
conflict of interest
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Ethics
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© 2007 Nan McKay & Associates
Example #1
 Cybil is a commissioner
 She is also VP of the board of American
Handicapped Citizens of her county
 She does not receive a salary or any other
compensation for serving on AHC’s board
 AHC is subrecipient of $25,000 in PHA funds
 Is there a problem here?
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© 2007 Nan McKay & Associates
Answer #1
 No – Cybil may continue to serve as a
commissioner of the PHA and also as VP of
AHC’s Board
 Cybil has no financial interest in AHC
 A conflict of interest would arise in this
situation only if Cybil received a salary or
other compensation for her AHC board
service. 24 CFR § 570.611(b)
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Illustration #2
 The PHA wishes to lease office space in the
city
 The PHA will pay the rent
 The mayor owns the building which the PHA
would like to lease
 Can the mayor lease office space to the PHA?
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© 2007 Nan McKay & Associates
Answer #2
 No
 24 CFR § 92.356(b) & ©
 Prohibit a person who is an elected official of a
city and in a position to gain inside information
from obtaining a financial benefit from such
activity
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© 2007 Nan McKay & Associates
Gratuities, Kickbacks, and Use of
Confidential Information
 PHA employees,
commissioners, or agents
must not accept, solicit, or
agree to accept gratuities,
favors, or anything of
monetary value from
contractors or parties with
contractual agreements
October 2007
Ethics
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© 2007 Nan McKay & Associates
Gifts
 PHAs may set minimum rules
where the financial interest is
not substantial or the gift is
of nominal value
 Common PHA policy is to
allow gifts worth under $25 if
shared with the whole office

October 2007
Ethics
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© 2007 Nan McKay & Associates
Kickbacks,
Anti-Competitive Practices
 Not always obvious
 Rebates, coupons, points and discounts,
taken personally, can be considered an
anti-competitive practice
October 2007
Ethics
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© 2007 Nan McKay & Associates
Kickbacks,
Anti-Competitive Practices
 An anti-competitive practice would be
providing information that would give one
firm an advantage over another, for example:
 Cost estimates
 Names of other bidders
 Other valuable information
October 2007
Ethics
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© 2007 Nan McKay & Associates
Back Door Selling
 Avoiding the procurement process
 For example, dealing directly with the
manager intending to use the service
 Green Lawn Company will provide services
for $500 per month, avoiding the need to
bid
October 2007
Ethics
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© 2007 Nan McKay & Associates
Nepotism
 The practice of giving
positions in the PHA to
relatives or friends rather
than to the most qualified
 The ACC prohibits this
practice
October 2007
Ethics
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© 2007 Nan McKay & Associates
Nepotism
 Applies to any present or
former member of the
board or employee who
formulates policy or who
influences decisions
 Applies throughout tenure
or employment and for one
year after
October 2007
Ethics
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© 2007 Nan McKay & Associates
Sanctions
 The executive director and the board are
responsible for establishing sanctions for
violations of ethical standards
 Civil and administrative remedies
 HUD may exercise any available remedy
as well
October 2007
Ethics
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© 2007 Nan McKay & Associates
Case Study
 You are a PHA foreman
 You own a two-family home and advertise your unit
for rent
 A mother and her two children want to rent the unit
 You agree to rent the unit
 This potential tenant then hands you a HCV voucher
RFTA form from your PHA
 What do you do?
October 2007
Ethics
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© 2007 Nan McKay & Associates
Case Study
 Your supervisor asks you to sell tickets for a
councilwoman’s upcoming campaign
 You are the procurement officer and you know
lots of vendors, so you have the best chance
of selling the tickets
 How do you avoid this situation and keep your
job?
October 2007
Ethics
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© 2007 Nan McKay & Associates
Procurement Categories
 Do’s and don’ts
 Petty cash
 Small purchases
 Sealed bids
October 2007
Ethics
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© 2007 Nan McKay & Associates
Petty Cash
 Do
 Use for small purchases where it may be
impractical to issue a check
 Don’t
 Use for everyday or repeat business
October 2007
Ethics
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© 2007 Nan McKay & Associates
Sealed Bidding
 This process if full of potential areas of risk
 Do
 Protect the PHA at all times
 Protect the “information” in connection with the
bid process
 Ensure bids are date/time stamped and locked
until bid opening
October 2007
Ethics
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© 2007 Nan McKay & Associates
Sealed Bidding
 Do
 Publicize the Invitation for Bid (IFB) including, if
applicable, the pre-bid conference, as stated in
the PHA’s procurement policy
 Disclose any conflict of interest, real or
perceived, with any potential bidder
October 2007
Ethics
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© 2007 Nan McKay & Associates
Sealed Bidding
 Don’t
 Give any potential bidder any information that
not all potential bidders are given
 Provide any information at the bid opening
other than the name of the bidder and proposed
price
October 2007
Ethics
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© 2007 Nan McKay & Associates
The Envelope Please!
 Common mistakes
 Opening envelope prior
to official date and time
 Accepting a bid after
the official bid opening
date and time…
October 2007
Ethics
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© 2007 Nan McKay & Associates
The Envelope Please!
 Common mistakes
 Commenting on the “Winner!” prior to
validation of bid documents and conducting
due diligence procedures
 Allowing changes in bid documents
 Providing information to one bidder only
October 2007
Ethics
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© 2007 Nan McKay & Associates
Unethical Actions
 Revealing proprietary
information
 Changing the bid after
opening
 Attempting to influence the
selection of bidder based on
known false information
October 2007
Ethics
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© 2007 Nan McKay & Associates
Disclose Potential Conflicts
 Avoid actual conflict of
 Contact HUD
interest
 Consider the
consequences
 State Board Of Ethics
 Trust your inner voice
 Job loss, reputation
October 2007
Ethics
Slide Number
#90
 Contact state office
 How does it look on
the front page of the
paper?
90
© 2007 Nan McKay & Associates
Competitive Proposals (RFP)
 Professional services
(architect, engineer)
done through the
competitive process
 Both technical and price
factors are considered
 Allows discussions with
each offeror
Slide Number #91
© 2007 Nan McKay & Associates
Competitive Proposals (RFP)
 Do
 Be very specific in the SOW – describe in
detail the service(s) or good(s) the PHA is
soliciting
 Don’t
 Make a decision before best and final offers
are received
Slide Number #92
© 2007 Nan McKay & Associates
Contract Management
 The PHA is
obligated to ensure
the performance of
the contract
 Must inspect
products when
delivered
Slide Number #93
© 2007 Nan McKay & Associates
Other Areas for Ethics
Management
 Nondiscrimination
 Sexual harassment
 Human Resources
 Hiring, promoting,
discipline
 Fraud
October 2007
Ethics
Slide Number
#94
94
© 2007 Nan McKay & Associates
Sexual Harassment
 One of the most
common and
increasing areas of
lawsuits
 Violates Title VII,
Civil Rights Act of
1964
October 2007
Ethics
Slide Number
#95
95
© 2007 Nan McKay & Associates
Sexual Harassment
 Sexual harassment is unwelcome behavior
that happens to someone because of his or
her sex
 Most lawsuits based on a “hostile work
environment”
Slide Number #96
© 2007 Nan McKay & Associates
Ethics in Human Resources
 HR policies and processes should
foster ethics in:
 Getting the best employees
 Paying employees
 Training employees
 Ensuring compliance
 Ensuring safe work environments
 Fostering productivity
October 2007
Ethics
Slide Number
#97
97
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Thorough and well-defined hiring practices
 Background checks
 References
 Law enforcement and drug checks
 Interviews done the same way for all
applicants, with documentation supporting
the hire
October 2007
Ethics
Slide Number
#98
98
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Training
 Ethics policies and procedures are useless
unless all staff members are trained about
what they are, how they work, and their roles
 The legal system often interprets employee
behavior (rather than written policies) as de
facto policy
October 2007
Ethics
Slide Number
#99
99
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Training
 Orient new employees to the PHA’s ethics
policies and procedures during new
employee orientation
 Review ethics is management training
experiences
 Involve staff in review of codes and policies
…
October 2007
Ethics
Slide Number
#100
100
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Performance evaluations
 Include ethical performance as a dimension
in performance appraisals
October 2007
Ethics
Slide Number
#101
101
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Discipline
 How supervisors correct behavioral problems
and make sure staff adheres to rules
 The purpose is to correct, not to punish or
embarrass
 An articulated disciplinary policy and process
ensure that the process is ethical
Page 9-23
Slide Number #102
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Often, a positive approach solves the
problem without having to discipline
 Frequent communication to employees
Slide Number #103
© 2007 Nan McKay & Associates
Ethics in Human Resources
 Discipline
 Thorough documentation from the beginning
 Includes emails
 Talk to the employee and document the
conversation
 The question the courts ask is whether the
employer had “just cause” to discipline
Slide Number #104
© 2007 Nan McKay & Associates
Fraud
 Fraud is the intentional,
false representation of
concealment of a material
fact for the purpose of
inducing another to act
on it, to the injury of an
entity or person
October 2007
Ethics
Slide Number
#105
105
© 2007 Nan McKay & Associates
Ethics Resource
 Office Of Inspector General (IG) posted an
updated guide on fraud prevention on
March 5, 2004
 HUD looks for good internal controls
 Appendix 3
October 2007
Ethics
Slide Number
#106
106
© 2007 Nan McKay & Associates
Conditions That Foster Fraud
 Stress in employees’
personal life
 Financial troubles
 Credit card debt
 Divorce
 Addictions
 Emotional issues
October 2007
Ethics
Slide Number
#107
107
© 2007 Nan McKay & Associates
Conditions That Foster Fraud
 Working conditions
 Employees feel unfairly treated
 Lack of recognition for the value of their work
 Financial compensation
 Appreciation for the work performed
 Lack of respect by supervisors and other
employees
October 2007
Ethics
Slide Number
#108
108
© 2007 Nan McKay & Associates
Conditions That Foster Fraud
 Working conditions
 “No one cares” - if there is an atmosphere that
no one cares, no one is checking, it doesn’t
make any difference
 Everyone else is doing it, I might as well get
mine
October 2007
Ethics
Slide Number
#109
109
© 2007 Nan McKay & Associates
Fraud Prevention
 Increasing the perception of detection might
be the most effective fraud prevention
method
 Controls do little good in forestalling theft and
fraud if those who may be inclined to commit
fraud do not know that controls are in place
October 2007
Ethics
Slide Number
#110
110
© 2007 Nan McKay & Associates
Practical Steps – Fraud
Prevention
 PHA policies clear and up-to-date
 Personnel, procurement, and ethics
 ACOP and Admin Plan
 Nondiscrimination
October 2007
Ethics
Slide Number
#111
111
© 2007 Nan McKay & Associates
Practical Steps – Fraud
Prevention
 Institute good internal control
 Checks and balances
 PO system – who is authorized to purchase, who
is authorized to receive goods
 Rent collection – who receives rent, who posts
 Inventory control
 Well-defined system, inventory taken regularly
October 2007
Ethics
Slide Number
#112
112
© 2007 Nan McKay & Associates
Practical Steps – Fraud Prevention
 Internal controls
 Alter “routine or predictable” systems from time
to time
 Take notice of employees that never take a
vacation for more than one or two days at a time
 Conduct random audits, and make it well known
 Institute an atmosphere of accountability
October 2007
Ethics
Slide Number
#113
113
© 2007 Nan McKay & Associates
Practical Steps – Fraud Prevention
 Internal controls
 Time sheets
 Sick time claims
 Patterns of absences
October 2007
Ethics
Slide Number
#114
114
© 2007 Nan McKay & Associates
Practical Steps – Fraud Prevention
 Management must set the tone
 Must inspire staff
 Must clearly communicate the mission of the
PHA
 Must establish a system that recognizes
individual accomplishment
October 2007
Ethics
Slide Number
#115
115
© 2007 Nan McKay & Associates
Practical Steps – Fraud
Prevention
 Management must:
 Promote qualified staff
 Establish an atmosphere in which honest
employees do not fear reprisals for reporting
abuse
 Anonymous reporting
 Whistle blower protection provisions
October 2007
Ethics
Slide Number
#116
116
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 PHA policies should be clear, and practice
should match policies
 Only then can PHA manage ethics
October 2007
Ethics
Slide Number
#117
117
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Recognize that managing ethics is a
process
 Ethics programs may seem more process-
oriented than other management practices
 The most important aspect from ethics
management is the process of reflection and
dialogue that produces results
October 2007
Ethics
Slide Number
#118
118
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Bottom line of managing ethics is
accomplishing preferred behaviors in the
workplace
 Ethical policies and rules are meaningless
unless they generate fair and just behaviors
 Codes of ethics and policies must also
generate procedures and training
October 2007
Ethics
Slide Number
#119
119
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 The best way to handle ethical dilemmas is
to avoid their occurrence in the first place
 Codes of ethics and ethics policies sensitize
employees to ethical considerations and
minimize the chances of unethical behavior
occurring in the first place
October 2007
Ethics
Slide Number
#120
120
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Make ethics decisions in groups, and make
decisions public, as appropriate
 Thus diverse interests and perspectives are
more integrated, and credibility of the
decision is increased
 Suspicion of unfair bias is decreased
October 2007
Ethics
Slide Number
#121
121
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Integrate ethics management with other
management practices
 For example, when developing personnel
policies, reflect on what ethical values most
important in the agency’s culture and then
design policies to produce these behaviors
October 2007
Ethics
Slide Number
#122
122
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Use cross-functional teams when
developing and implementing ethics
policies and procedures
 PHA employees should feel a sense of
participation and ownership in the ethical
values of the PHA
October 2007
Ethics
Slide Number
#123
123
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Value forgiveness
 Managing ethics may actually increase the
number of ethical issues to be dealt with
because people are more sensitive to their
occurrence
 Help people recognize and address their
mistakes and then support them to try to
operate ethically
October 2007
Ethics
Slide Number
#124
124
© 2007 Nan McKay & Associates
Guidelines for Managing Ethics in
the Workplace
 Trying to operate ethically and making a
few mistakes is better than not trying at all
 All organizations are made up of people
 People are not perfect
 Some organizations fear sticking their necks
out because they fear mistakes – it’s the
trying that counts
October 2007
Ethics
Slide Number
#125
125
© 2007 Nan McKay & Associates
Ethics Resource
 HUD’s Office of General Counsel and PIH
published an ethics reference manual
 February 2003
 Appendix guidance
October 2007
Ethics
Slide Number
#126
126
© 2007 Nan McKay & Associates
Key Roles and Responsibilities in
Ethics Management
 Roles vary according to the size of the PHA
 The following functions are responsibilities
that should be included somewhere in the
agency
October 2007
Ethics
Slide Number
#127
127
© 2007 Nan McKay & Associates
Key Roles and Responsibilities in
Ethics Management
 The PHA’s executive director must fully
support ethics
 The ED should announce ethics policies and
procedures, and champion their development
and implementation
 The ED should always aspire to lead ethically
 And if a mistake is made, admit it
October 2007
Ethics
Slide Number
#128
128
© 2007 Nan McKay & Associates
Key Roles and Responsibilities in
Ethics Management
 The board should approve ethics policies
 And monitor that policies are implemented
October 2007
Ethics
Slide Number
#129
129
© 2007 Nan McKay & Associates
Key Roles and Responsibilities in
Ethics Management
 Consider establishing an ethics
management committee
 The committee would oversee development,
implementation, and training of ethics
policies and procedures
 Should be comprised of senior management
October 2007
Ethics
Slide Number
#130
130
© 2007 Nan McKay & Associates
Key Roles and Responsibilities in
Ethics Management
 Consider assigning/developing an ethics
officer or ombudsperson
 Trained in matter of ethics in the workplace,
particularly about resolving ethical dilemmas
October 2007
Ethics
Slide Number
#131
131
© 2007 Nan McKay & Associates
Q&A
 All questions
welcome
 Thank you for
participating
Slide Number #132
© 2007 Nan McKay & Associates
Upcoming Lunch ‘n’ Learns
 Nov 30th – Ethics for the PH Manager
 Dec 6th – HCV Leasing Activities
 Dec 7th – Effective Property Management
 Dec 13th - Workflow
Slide Number #133