Fraud response plan

Purpose of the fraud response plan

The fraud response plan is designed to ensure timely and effective action in the event of suspected fraud to:

  • minimise fraud by taking prompt action
  • prevent further losses where fraud has occurred
  • manage consequences for other staff, including sudden changes in workload, altered duties and adverse staff reactions to investigation work
  • maximise recovery of losses
  • identify the perpetrators and maximise the success of any disciplinary and legal action taken
  • ensure the accuracy and integrity of evidence for successful disciplinary and court action
  • manage any adverse publicity for the organisation
  • maximise positive publicity when frauds are discovered and dealt with effectively
  • identify lessons to be learned to improve fraud management
  • ensure a fair and consistent response to suspected frauds
  • deter others from fraud that they may be contemplating

Dealing with a suspected fraud

Senior managers have a primary responsibility for preventing, detecting and investigating.

However, it is always vital that evidence is preserved and suspicions are not aroused, and the first action must always be to contact the Audit Manager for advice and support:

This will allow the Audit Manager to:

  • provide initial advice on investigation process and procedure
  • collate the information with all other known issues, which may suggest specific approaches to investigation
  • jointly with Human Resources, decide on actions needed in relation to any employee potentially involved (such as suspension to protect evidence), and agree these with the head of service
  • log the event in our fraud register
  • report appropriately to Chief Executive, Section 151 Officer, the Monitoring Officer and Executive Management Team

The only exception to this is where the matter is clearly related to the benefits system. In such cases, these will be refered directly to the Department for Work and Pensions (DWP) who will investigate the cases under the Single Fraud Investigation Service.

If the Audit Manager identifies that a suspicion raised under this procedure may relate to money laundering, they will take the necessary actions under the anti-money laundering policy and procedure, and advise the manager accordingly.

Initial enquiries

Where it is appropriate to do so, the Audit Manager may advise the manager to make discreet initial enquiries promptly to determine if there actually does appear to be an irregularity, provided that:

  • they can do so without alerting the perpetrator to the investigation
  • they have sufficient experience to do so

During this initial enquiry the manager should:

  • determine the factors that gave rise to the suspicion
  • examine the factors to determine whether a genuine mistake has been made or whether an irregularity has occurred
  • make a written record of the alleged irregularity (access to this document should be restricted e.g. not held in an 'open area' of the network)
  • secure any relevant documentation/records (if this can be done without alerting the perpetrator)

The manager should not interview staff at this stage.

Scope of the investigation

The manager, Human Resources and the Audit Manager will agree the way forward, in consultation with the Section 151 Officer, the Monitoring Officer and the Head of service.

They will consider whether to involve other agencies at this point (e.g. Police, HM Revenue and Customs, External Audit, the Department for Work and Pensions, the National Anti-Fraud Network, the National Crime Agency, and other councils). Such contact will be through the Audit Manager, at least initially.

The Internal Audit Team will usually conduct all fraud investigations. However, where the Audit Manager is confident that an investigation can be undertaken by the service (i.e. staff have the experience and ability to complete the investigation successfully, and are clearly not involved in the irregularity) the Audit Manager will provide advice and guidance to the nominated investigating officer.

The Audit Manager will consult the relevant people to determine the next steps. The exact format is fluid – it is sometimes appropriate to convene a meeting, and on other occasions it will be sensible to hold a series of one-to-one meetings or phone calls.

As a minimum, consultations will involve:

  • the manager
  • the Section 151 Officer
  • the Head of Human Resources
  • the Head of Service

Additionally, they may consult:

  • the police
  • the Chief Executive
  • the Head of Communications
  • Her Majesty’s Revenues and Customs
  • External Audit
  • any other relevant person or body

Often, the initial consultations will define the list of further consultees, and the list will remain fluid and subject to revision as the investigation develops.

The consultations will include specific consideration of whether it is necessary to suspend one or more employees to protect evidence, colleagues or assets.

Conducting the investigation

Whilst conducting the investigation, the Audit Manager will ensure:

  • the investigation is completed promptly
  • compliance with legislation on interviewing (Police and Criminal Evidence Act, PACE) and surveillance (Regulation of Investigatory Powers Act, RIPA). However, it is not normally necessary, even when there may be a criminal offence, to conduct interviews under PACE rules. The police can re-interview witnesses and suspects later on in the process
  • all evidence is recorded, ensuring that it is sound and adequately supported (see further guidance below)
  • written records of all fact-finding meetings are retained
  • any email correspondence relating to the investigation is discreet and use an agreed 'case name' rather than real names or locations. All sensitive attachments should be password protected (or, preferably, not emailed). Emails will be protectively marked *Protect - Personal*
  • all evidence is held and stored securely, with appropriate restriction to access (both manual and electronic documentation) (see further guidance below)
  • confidentiality and discretion is maintained throughout, information will only be shared on a “need to know” basis. In particular, be mindful that senior officers may need to hear disciplinary cases, and therefore should not know details of cases
  • where appropriate, contact other enforcement agencies e.g. Police, HM Revenue & Customs. This should be always enacted via Internal Audit as they have established lines of communication and referral protocols.
  • investigators must not accept any offer of repayment of money or resignation at any stage, as this could prejudice the investigation. Any such offers should, however, be recorded in interview notes, and passed on to the head of service for consideration (in conjunction with the HR Manager).

We have the right to suspend any employee involved pending the outcome of an investigation. Suspension does not imply guilt but suspension can prevent the removal or destruction of vital evidence. When suspects are not suspended, supervision will usually need to be increased. Advice will always be sought from Human Resources on suspensions and any subsequent disciplinary action.

The Internal Audit Manager will report losses to our Risk and Insurance Officer at the earliest stage.

Some organisations always delay internal disciplinary procedures pending police action on criminal offences, and dismiss employees after a court case. Explicitly, we will pursue disciplinary matters at once, in order to remove wrongdoers from the payroll as rapidly as is possible using proper process. This is because we cannot afford to pay people to sit at home and be investigated over an extended period.

Additionally, we recognise that many theft, fraud, corruption and bribery matters will involve clear gross misconduct matters which will not constitute prosecutable crimes, because of the definition of crimes under relevant acts, and because of levels of evidence.

Key objectives at this stage

These are to:

  • prevent further losses
  • secure evidence of the fraud to allow us  to pursue successful disciplinary action and prosecution
  • assess the likely extent of losses
  • recover funds where possible

Next steps

Report the results of the initial enquiry to Internal Audit. They may give further advice on more work needed, or other actions to be taken. As before, this may be in consultation with a variety of other employees and external agencies.

Give Internal Audit the evidence that you have collected and tell them what you have already done (e.g. suspended employees, changed procedures or impounded IT equipment).

Internal Audit or the police may carry out further investigations, if the case is more complex than it appeared at first.