Anti Fraud Policy
This resource provides for the Anti Fraud Policy for all staff members. It includes the responsibilities for staff and measures put in place to detect fraud.
Date policy first adopted: 01/04/2011
Review period: Ad hoc when a change to legislation or ESC process requires it and at least every four years
Date of last review: 17/07/2023
Date of next review: 31/07/2027
1. Purpose and Scope
The Ethical Standards Commissioner (ESC) requires all employees at all times to act honestly and with integrity and to safeguard the public resources for which they are responsible. ESC will not accept any level of fraud or corruption; consequently, any case will be thoroughly investigated and dealt with appropriately. The Commissioner is committed to ensuring that opportunities for fraud and corruption are reduced to the lowest possible level of risk.
All employees have a responsibility for fraud prevention and detection. This policy applies to all employees regardless of working pattern or nature of employment contract. It also applies to anyone working within the premises of and / or for the Commissioner (for example sub-contractors, consultants, secondees from another organisation or agency staff). The word employee(s) in the context of this policy should be taken to mean all such individuals, unless specifically referred to as being directly employed by ESC.
The ESC will always attempt to recover wrongfully obtained assets from fraudsters.
2. Implementation, monitoring and review of the policy
Overall responsibility for policy implementation, monitoring and review lies with ESC. Everyone covered by the scope of the policy is obliged to adhere to and facilitate implementation of the policy. Appropriate action will be taken to inform all new and existing employees and others covered by the scope of the existence of the policy and their role in adhering to it. The policy will be reviewed at such times as legislation or a change to the ESC policy position requires it and at least every four years. The policy will be made available to the general public.
3. What is Fraud?
There is currently no precise legal definition of fraud. The term “fraud” 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 the purposes of this policy, fraud is defined as the use of deception with the intention of obtaining an advantage, avoiding an obligation or causing loss to another party.
This policy is concerned with occupational fraud; that is, fraud committed by ESC employees or contractors in the course of their work.
Occupational fraud and abuses fall into four main categories:
- theft, the misappropriation or misuse of assets for personal benefit
- bribery and corruption
- false accounting and/or making fraudulent statements with a view to personal gain or
- gain for another: for example, falsely claiming overtime, travel and subsistence, or special leave (with or without pay), and
- externally perpetrated fraud against an organisation.
4. Danger Signs
Employees must always be alert to the risk of fraud, other forms of theft, and corruption.
External frauds are frauds perpetrated by third parties against ESC (e.g. contract fraud or fraudulent invoices).
Danger signs of external fraud may include:
- Photocopies of documents when originals would be expected
- Discrepancies in information e.g. signatures and dates
- Unexpected queries from stakeholders or suppliers e.g. bank account detail changes
- Requests for non-standard types of payment
- Unexpected trends or results e.g. from reconciliations
Internal fraud refers to fraud by an employee against the ESC.
Danger signs of internal fraud may include:
- Evidence of excessive spending by an employee
- Inappropriate relationships with suppliers
- Reluctance of staff to take leave
- Undue possessiveness of or anomalies between work records
- Pressure from colleagues to avoid normal control procedures
- Abnormal Travel and Subsistence claims, overtime or Flexible Working Hours patterns.
5. Avenues for Reporting Fraud
ESC has in place avenues for reporting suspicions of fraud, which are detailed in the Fraud Response Plan and the Whistleblowing Policy. In summary, employees should report any such suspicions to their line manager in the first instance. Concerns about a line manager should be reported to the Head of Corporate Services (HCS). Concerns about the HCS should be reported to another member of the Senior Management Team. The Whistleblowing Policy gives direction for employees on reporting matters which may involve the Commissioner.
All matters will be dealt with in confidence and in strict accordance with the terms of the Public Interest Disclosure Act 1998. This statute protects the legitimate personal interests of employees. Vigorous and prompt investigations will be carried out into all cases of suspected fraud.
All instances of suspected fraud that are notified to us will be investigated and reported to the appropriate authorities (e.g. the Police).
The Scottish Public Finance Manual sets out the responsibilities of the ESC in relation to fraud. The Commissioner is committed to preventing fraud and corruption from occurring, to having appropriate systems of detection and correction in place and to maintaining an antifraud culture.
The Commissioner, as Accountable Officer, is responsible for the systems of internal control that support the achievement of ESC’s policies, aims and objectives. The HCS is responsible for ensuring that appropriate procedures are in place to prevent and detect fraud.
Overall responsibility for managing the risk of fraud lies with the Commissioner, as Accountable Officer. The Commissioner remains directly responsible for:
- Maintaining adequate systems of control to mitigate risk relating to fraud occurring, going undetected and not being appropriately challenged
- Ensuring that vigorous and prompt investigations are carried out if fraud occurs or is suspected
- Taking appropriate legal and/or disciplinary action against perpetrators of fraud and against any employee who fails to report fraud, and to recover assets. Employees found to have perpetrated any frauds or whose negligence is held to have facilitated any frauds may be found to have engaged in gross misconduct, the penalty for which may include summary dismissal in line with the Disciplinary Policy
- Ensuring that appropriate action is taken to minimise the risk of similar frauds occurring in future.
The Commissioner has delegated certain responsibilities to the HCS. These are:
- Establishing an effective anti-fraud policy and fraud response plan, taking into account the level of fraud risk identified
- Establishing and maintaining a Scheme of Delegation which outlines the reporting lines and methods of managing fraud risk for key areas of the business
- Designing an effective control environment to prevent fraud, taking into account the level of risk identified
- Establishing appropriate mechanisms for:
- reporting fraud risk issues
- reporting incidents of fraud to the Commissioner.
- Ensuring that the external auditor assesses annually ESC’s methods of managing fraud risk
- Making sure that all employees are aware of the organisation’s anti-fraud policy and
know what their responsibilities are in relation to combating fraud.
Every employee is responsible for:
- Acting with propriety in the use of official resources and the handling and use of public funds whether they are involved with cash or payments systems, receipts or dealing with suppliers
- Conducting themselves in accordance with ESC’s Code of Conduct
- Being alert to the possibility that unusual events or transactions could be indicators of fraud
- Assessing the types of risk involved in the operations for which they are responsible
- Ensuring that an adequate system of internal control exists within their areas of responsibility and that controls operate effectively
- Reporting details immediately through the appropriate channel if they suspect that a fraud has been committed or see any suspicious acts or events
- Wherever possible, preserving evidence, that is email trails, screenshots, etc
- Co-operating fully with whoever is conducting internal checks or reviews or fraud investigations.
7. Notification and Accounting
Losses due to fraud are subject to the guidance on Losses and Special Payments detailed in the Scottish Public Finance Manual. Any losses must be brought, as appropriate, to the attention of the Scottish Parliament through notes to the Annual Accounts