What next if you suspected fraud, corruption?

You may find yourself in a dilemma of who and when to report such matters concerning fraud and corruption. Remember to act professionally, or else you will be tailored with the amateurs! 

You may find yourself in a dilemma of who and when to report such matters concerning fraud and corruption. Remember to act professionally, or else you will be tailored with the amateurs! 

Key general principles
Compliance with internal control procedures:  Employees should ensure that they comply with all controls and procedures established by their employing organisation, including those designed to prevent fraud and corruption. It is the management’s responsibility to design internal controls and revise them when need arises.

Employees should be fully aware of the controls that are in their organisation. Such information can be found in the organisation’s standing orders and financial regulations and other such procedure documents.

Take all reasonable steps to ensure that controls are complied with by others.

This is particularly relevant for members who have a supervisory or management responsibility.

Reporting internal control weaknesses: This is usually done by an internal audit function, if it’s in existence and or external auditors.

Management should make every effort to be aware of the potential consequences of a failure or weakness in control procedures, and should take all reasonable steps to ensure that such control procedures are sufficiently robust to prevent fraud and corruption.

A reluctance to report potential control weaknesses undermines the organisation’s entire corporate governance and control framework.

Fraud and corruption reporting procedures
Employees should ensure that they are fully conversant with the procedures established, for reporting allegations of fraud and corruption.

Employees should familiarise themselves with their organisations’ procedures for reporting allegations of fraud. It should also be recognised that different types of allegation may have a different reporting protocol.

Members in senior-management roles should ensure that clear and effective procedures are in place for reporting allegations of fraud and corruption, and that these are communicated to all staff.

Members should ensure that they report all suspicions of fraud and corruption promptly and confidentially using the established reporting procedures.

Should members receive, or uncover, evidence of the possibility of fraud or corruption, they should promptly report the matter to the appropriate person identified in their organisations’ established reporting procedures.

The consequences of a failure to report allegations of fraud and corruption promptly can be serious, and may affect the chances of a successful investigation.

Also, those who perpetrate fraud and corruption will feel less likely to be apprehended if they become aware of a reluctance to act when such abuses are uncovered.

In the absence of such procedures, the appropriate person would, for example, include a line manager, the head of internal audit or the director of finance.

If there is any doubt as to whom allegations should be reported, the organisation’s external auditor should be in a position to advise.

Allegations should be reported confidentially. Confidentiality is important not only to protect the innocent but also to ensure that an opportunity is not offered to cover up fraudulent activity or to destroy potential evidence of such activity.

Members should not attempt to investigate such matters unless they have received specific training and have the authority within the organisation to conduct such investigations.

It is essential that fraud and corruption investigations are dealt with only by trained staff, to ensure that nothing is done that may hamper any subsequent criminal or civil proceedings.

Getting information is usually hampered by the senior management especially when they are involved in corruption and fraud.

More developed countries have laws to protect whistleblowers and this is usually the best source of information to fight fraud and corruption.

All in all, the do’s and don’ts vis-à-vis fraud and corruption are:
Do raise the matter.

The sooner the problem is raised and looked into, the sooner any wrongdoing can be stopped and the sooner you and others can be reassured things are in order.  

Do pass on any reasonable suspicion to someone in authority.

This is usually your manager or the internal audit service. Alternatively, you could contact the director of finance or the monitoring officer, such as anti-money laundering officer.

Do remember key details. If possible, make a note of key details, such as what caused your suspicion, when things happened and who was involved. 

Don’t turn a blind eye. If you are worried that some wrongdoing is happening at work, please don’t keep it to yourself. Being wise after the event helps nobody.

Don’t investigate the matter.

You may make matters worse if you do. It’s your job to raise the concern, not to prove it.

Don’t report your suspicions to someone who does not have proper authority.

There are special rules surrounding the gathering of evidence for use particularly in criminal cases.

Attempts to gather evidence by people who are unfamiliar with these rules can inadvertently destroy the case;
Don’t delay. As you won’t be asked to prove your concern, raise it when it’s a concern. Don’t wait for proof.    


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