Fraud Policy

This is the latest version of the Department for the Economy Fraud Policy which was last updated in May 2020.

Introduction

The department requires all staff at all times to act honestly and with integrity and to safeguard the public resources for which they are responsible. 

The department takes a zero tolerance approach to fraud. Cases will be thoroughly investigated, reported to the police as necessary, and appropriate action will be taken to recover monies lost as a result of fraud perpetrated against the Department. The department is committed to ensuring that opportunities for fraud and corruption are minimised.  

There is a continuing need to raise staff awareness of their responsibility to safeguard public resources against the risk of fraud.  The overall purpose of this policy, therefore, is to detail the relevant roles and responsibilities regarding the prevention, detection and response to fraud.

The principles of this policy are based on the December 2011 DoF publication “Managing the Risk of Fraud (NI) A Guide for Managers” and the good practice guidance "Managing Fraud Risk in a changing environment" issued by the NIAO in November 2015.  These principles apply not only to the Department but also to its Arm's Length Bodies (ALBs). Each Chief Executive (or equivalent) should ensure that the requirements of the Department’s Fraud Policy and Fraud Response Plan are reflected in their organisations, with such amendments as are necessary to reflect their organisational structure and reporting lines.

The procedures to be followed in the event of a fraud being detected or suspected are detailed in the Department for the Economy Fraud Response Plan. 

What is Fraud?

The Fraud Act 2006 became law in Northern Ireland in January 2007 and created a new general offence of Fraud which can be committed in three ways:

  • By false representation
  • By failing to disclose information
  • By abuse of position.

Fraud is an act of deception intended for personal gain or to cause loss to another party.  It is the mechanism through which a fraudster gains unlawful advantage or causes unlawful loss.

In this policy, the term ‘fraud’ is used in the wider, commonly used sense, to describe acts such as theft, false accounting, bribery and corruption, conspiracy to defraud, money laundering etc. Definitions of these are outlined below:

Theft

Dishonestly appropriating the property of another with the intention of permanently depriving them of it (Theft Act (Northern Ireland) 1969). This may include the removal or misuse of funds, assets or cash.

False Accounting

Dishonestly destroying, defacing, concealing or falsifying an account, record or document required for any accounting purpose, with a view to personal gain or gain for another, or with intent to cause loss to another or furnishing information which is or may be misleading, false or deceptive (Theft Act (Northern Ireland) 1969).

Bribery and Corruption

The Bribery Act 2010 came into effect on 1July 2011. It defines four criminal offences of offering or paying a bribe; requesting or receiving a bribe; bribing a foreign public official; and failure of commercial organisations to prevent bribery by persons associated with them. For offences committed before the 1 July 2011 which involved the offering, giving, soliciting or acceptance of an inducement or reward that may influence the actions taken by the authority, its members or officers these will fall under the Prevention of Corrupt Practices Acts.

Conspiracy to Defraud

Conspiracy to defraud is a common law crime which has been preserved in Statute. It is an offence for two or more persons to agree, by dishonesty, to embark on a course of conduct which, if the agreement is carried out in accordance with their intentions, will necessarily amount to or involve some third party being deprived of something which is theirs or to which they are entitled or might be entitled.

Money Laundering

Money Laundering is the process of taking proceeds of criminal activity and making them appear legal. Public sector organisations should consider the risk that their systems and processes are at from being used to launder money and follow best practice in addressing these

Reporting Fraud

Where there is a suspicion or allegation of fraud, the procedure to be followed is set out in the Department for the Economy Fraud Response Plan. Staff can report any suspicions to their line managers or directly to the Fraud & Raising Concerns Branch (part of Corporate Governance Division), using the referral form at Annex 1 of the Fraud Response Plan. 

In accordance with the guidance contained in their Framework Document, ALBs are required to report all suspected or proven frauds to the appropriate Sponsor Team within the department immediately. The ALB will complete the referral form at Annex 1 of the department’s Fraud Response Plan, forward to the Fraud & Raising Concerns Branch and cc to the Director responsible for their Sponsor Team.

The Public Interest Disclosure (NI) Order 1998 protects individuals from retribution in the workplace for raising a genuine concern, whether it relates to a criminal offence (eg fraud) or other form of wrongdoing.

If there is a suspicion of wrongdoing other than actual or suspected fraud, such matters may be raised using the department’s Raising Concerns (Whistleblowing) Policy.

Reporting Fraud to the Department of Finance and the Comptroller and Auditor General

The department’s key responsibilities in dealing with fraud are set out in Annex 4.7 of “Managing Public Money Northern Ireland” (MPMNI).

As required by MPMNI, the department should report immediately, to the Department of Finance (DoF) and the Comptroller and Auditor General (C&AG), all frauds (proven or suspected), including attempted fraud, which affect the department or its ALBs. Frauds (proven or suspected) including attempted fraud, affecting public funds (including mainstream and European funding) disbursed by Voluntary Bodies and other agents, such as Intermediary Funding Bodies, or funded third party organisations, should also be reported immediately. While the Fraud Act 2006 provides a legal definition for fraud, reports should be made for all cases falling within the wider common definition of ‘fraud’.

The arrangements for reporting are set out in FD (DFP) 04/12 - Ad hoc fraud reporting to DFP and the Comptroller and Auditor General . The department’s Fraud and  Raising Concerns Branch is responsible for notifying DOF and the C&AG.

Responsibilities

Once suspicion has been raised that an act of fraud, bribery or serious irregularity may have been attempted or perpetrated, staff and / or management must follow the guidance provided in the departmental Fraud Response Plan.

General responsibilities in relation to fraud are set out below:  

Accounting Officer

The Department’s Accounting Officer is responsible for establishing and maintaining a sound system of internal control that supports the achievement of departmental policies, aims and objectives.  The system of internal control is designed to respond to and manage the whole range of risks that the department faces and is based on an ongoing process designed to identify the principal risks, evaluate the nature and extent of those risks and manage them effectively. Managing fraud risk will be seen in the context of the management of this wider range of risks.

As fraud prevention is the ultimate aim, anti-fraud measures should be considered and incorporated in every system and programme at the design stage, e.g. the design of application forms, the statement of accountability in respect of the content in completed applications, regular monitoring of expenditure etc.  Internal Audit Service is available to offer advice on risk and control issues in respect of existing and new systems and programmes as they are being developed.

Departmental Audit and Risk Assurance Committee

The Departmental Audit and Risk Assurance Committee is responsible for advising the Accounting Officer and Board on:

  • management’s assessment of the organisation’s fraud risk and the appropriateness of their response to it
  • the department’s fraud and raising concerns (whistleblowing) policies and procedures and its arrangements for investigations.

Director of Corporate Governance Division

The Director of Corporate Governance Division has overall responsibility for fraud investigations and fraud reporting.  Responsibilities include:

  • developing a fraud risk profile through evaluation of the possible impact and likelihood specific fraud risks identified in the department
  • ensuring the establishment of an effective fraud policy and fraud response plan
  • ensuring the establishment of appropriate mechanisms for:
    • reporting fraud risk issues
    • reporting significant incidents of fraud to the Accounting Officer
    • reporting to DoF and C&AG
    • liaising with the Departmental Audit and Risk Assurance Committee.
  • ensuring that all staff are aware of the department’s fraud and raising concerns (whistleblowing) policies and know what their responsibilities are in relation to combating fraud
  • ensuring that thorough and prompt investigations are carried out if fraud occurs or is suspected
  • ensuring that appropriate action is taken to recover assets where possible and minimise the risk of similar frauds occurring in future.

Internal Audit

 

Internal Audit is responsible for:

  • delivering an opinion to the Accounting Officer on the adequacy of arrangements for managing the risk of fraud and ensuring that the organisation promotes an anti-fraud culture
  • assisting in the deterrence and prevention of fraud by examining and evaluating the effectiveness of control commensurate with the extent of the potential exposure/ risk in the Department’s various operations
  • ensuring that management has reviewed its risk exposures and identified the possibility of fraud as a business risk

NICS HR

After full investigation of a fraud or raising concerns case, if the department finds that any member of staff has been involved, there will be consideration of the extent to which their actions constitute misconduct.

The Department’s HR Business Partnering team will provide strategic advice to managers and staff and there is a dedicated Resourcing and Employee Relations teams who will provide advice on individual cases and general policies.

NICS HR will be responsible for considering and / or taking:

  • legal and/or disciplinary action against the member(s) of staff in question
  • disciplinary action against supervisors where supervisory negligence is found to be a contributory factor

If any allegation, made by a member of staff, is determined to have been made maliciously, in bad faith, frivolously, or for personal gain, disciplinary action may be taken against the person making the allegation.

The Fraud and Raising Concerns Branch

The Fraud and Raising Concerns Branch is responsible for:

  • maintaining the department’s fraud and raising concerns (whistleblowing) policies and procedures in line with relevant legislation and best practice
  • co-ordinating case referrals and maintaining the department’s records in respect of fraud cases
  • notifying DOF and the C&AG, in line with the requirements of MPMNI
  • the provision of advice and guidance in relation to allegations and suspicions of fraud
  • overseeing or undertaking (where appropriate) investigations in line with the Departmental Fraud Response Plan or Raising Concerns Procedures
  • representing the department at fraud-related fora eg the NICS Fraud Forum and feeding back information as necessary
  • preparation of intra- and inter-departmental reports on fraud and raising concerns.

Managers

Managers are responsible for preventing and detecting fraud.  This includes:

  • ensuring that fraud risks have been identified within the Risk and Control Frameworks encompassing all operations for which they are responsible
  • ensuring that an adequate system of control exists within their area of responsibility, including ensuring that
  • there is a regular rotation of staff, particularly in key posts
  • wherever possible, there is a separation of duties so that control of a key function is not vested in one individual
  • backlogs are not allowed to accumulate
  • ensuring that controls are complied with and their systems continue to operate effectively
  • reviewing and testing control systems for which they are responsible
  • implementing new controls to reduce the risk of similar fraud occurring where frauds have taken place
  • quantifying the occurrence of fraud on an annual basis and updating risk registers and control frameworks to reflect the quantum of fraud within the business area
  • ensuring compliance with the Fraud Policy and Fraud Response Plan
  • initiating appropriate action when staff fail in their responsibilities regarding fraud
  • initiating legal and/or disciplinary action against perpetrators of fraud, where appropriate

Individual staff

Every member of staff 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 payment systems, receipts  or dealing with suppliers
  • conducting themselves in accordance with both the Northern Ireland Civil Service Standards of Conduct and the seven principles of public life as set out in the first report of the Nolan Committee ‘Standards in Public Life’ (selflessness, integrity, objectivity, accountability, openness, honesty and leadership)
  • being vigilant to the possibility that unusual events or transactions could be indicators of fraud
  • reporting details immediately, through the appropriate channels, if they believe that an opportunity for fraud exists or suspect that fraud has been committed
  • co-operating fully with whomever is conducting internal checks, reviews or fraud investigations.  Any information provided by staff will be treated confidentially, subject to GDPR and Freedom of Information requirements and/or legal obligations

As stewards of public funds, all staff must have, and be seen to have, high standards of personal integrity.  Staff, including temporary staff or contractors, must not accept gifts, hospitality or benefits from a third party, which might be seen to compromise their integrity. The department has specific guidance on The Provision and Acceptance of Gifts and Hospitality, which also applies to gifts or hospitality offered to spouses, partners or other associates of a member of staff, if it could be perceived that the gift or hospitality is in fact for the benefit of the staff member.

It is essential that staff understand and adhere to all departmental systems and procedures including those of a personnel/management nature such as submission of expenses claims and records of absence, flexi and annual leave.

Primary responsibility for the prevention and detection of fraud is the responsibility of management, not the Internal Audit Service.  However, during audit assignments, internal auditors are alert to risks and exposures that could allow fraud. 

Fraud Response Plan

The department has a Fraud Response Plan which sets out the processes for reporting suspicions and the conduct of preliminary enquiries and investigations. The plan forms part of the department’s set of fraud and raising concerns (whistleblowing) related policies.

The Northern Ireland Civil Service Fraud Forum

The NICS Fraud Forum is chaired by DOF and comprises representatives from all Northern Ireland departments along with representatives from the NIAO and the Police Service of Northern Ireland (PSNI). The purpose of the forum is to act as an advisory group to assist departments and their sponsored bodies to develop robust anti-fraud arrangements.  Members of the forum are responsible for ensuring that departmental bodies are advised of fraud related developments and that new guidance is disseminated effectively. 

The National Fraud Initiative

The Department participates in the National Fraud Initiative (NFI) along with other public bodies in the United Kingdom.  The NFI uses data matching to compare sets of data, such as the payroll, payments or benefits records of a public body against other records held by the same or another public body. This allows potentially fraudulent claims and payments to be identified. Where no match is found, the data matching process will have no material impact on those concerned.  Where a match is found, it indicates that there may be an inconsistency that requires further investigation.

Review of Fraud Policy

The Department will conduct a review of the departmental Fraud Policy every 2 years (or more often if the need arises) to ensure that it reflects current legislation and best practice. The policy will be updated accordingly and where any changes are to be made, these will be brought to the Departmental Board for endorsement. 

Conclusion

The circumstances of individual frauds will vary. The Department has a zero tolerance to fraud and all cases of actual and suspected fraud will be thoroughly and promptly investigated and appropriate action taken.

Any queries in connection with this policy or associated guidance should be directed to the Department’s Fraud and Raising Concerns Branch (028) 9025 7466 (DD 57466) or email raising.concerns@economy-ni.gov.uk

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