Fraud Reporting and

Investigation

Procedure

Policy Owner

Financial Services

Record no.

22/14384

Approved by:

EMT

Approval date:

9 February 2022

Endorsed by:

Audit and Risk Committee Date endorsed:

27 May 2022

Version

E

Last review date:

December 2019

Next review date:

December 2023

Prepared by

Riana Brims, Strategic Risk and Assurance Officer

Related document/s

Fraud and Corruption Control Framework; Fraud Prevention Policy; Public

Interest Disclosures Policy; Public Interest Disclosures Procedure.

Fraud Reporting and Investigation Procedure

Page 2 of 9

Members of the community must be able to rely on those in public office to conduct

themselves properly, and to use any powers they have in the service of the public.

Where there is a suggestion that public officials are breaching public trust vested in

them, misusing information or mismanaging public resources, it is vital that those who

observe or suspect such behaviour speak up and report the alleged fraud or corruption.

A report can be made about conduct that may have taken place, may still be occurring,

or is believed may occur.

Council’s Fraud Reporting and Investigation Procedure (Procedure) describes the process

for Council officers, providers and volunteers to report on, and to conduct an internal

investigation, when an incident of suspected fraud or corruption is detected.

The Procedure applies to Council officers, providers, and volunteers.

The reporting of suspected fraud and corruption is governed by the Independent Broad

based Anti-corruption Commission (IBAC), and must be complied with before any

internal investigation of a suspected incident can commence.

When a report of suspected fraud or corruption is determined to be an assessable

disclosure under the

(IBAC Act), Council officers are directed to the Public Interest Disclosures Procedure (PID

Procedure) for appropriate reporting and investigation guidelines. The PID Procedure

must first be complied with to ensure appropriate reports of suspected fraud and

corruption can qualify as a public interest disclosure.

In addition to this Procedure, Council has developed a:

•

Fraud and Corruption Control Framework (FCCF) describing Council’s fraud

management approach

•

Fraud Prevention Policy (FPP) outlining Council’s approach to fraud and corruption

prevention, detection and response, and its commitment to meeting legislative

obligations

•

Public Interest Disclosures Policy (PID Policy) establishing Council’s commitment

to maintaining its integrity, supporting anyone disclosing information about

improper conduct or detrimental action, and ensuring its compliance with the Act.

•

Public Interest Disclosures Procedure (PID Procedure) setting out how Council will

encourage and facilitate the making of disclosures, provide protecting and

support for disclosers and witnesses, and ensure confidentiality and appropriate

reporting of disclosures.

This Procedure is complementary to and is to be read in conjunction with the above suite

of documents, and is intrinsically linked to Council’s other key ethical guidance policies

and procedures as outlined in the following diagram.

Fraud Reporting and Investigation Procedure

Page 3 of 9

It is the responsibility of Council officers, providers and volunteers to conduct Council

business in an honest and ethical manner at all times.

All Council officers, providers and volunteers have a role in detecting and reporting fraud

or misconduct.

•

Mandatory reporting to IBAC of suspected fraud and misconduct

•

Reports to the Audit and Risk Committee confirmed fraud or corruption

(that is not a public interest disclosure).

•

Chief Executive Officer (or delegate) may request the release of

Council's surveillance footage or other data records for inspection.

•

Chief Executive Officer (or delegate) responsible for determining actions

and mitigation for suspected and confirmed fraud or corruption,

including reporting an incident to Victoria Police.

•

A Director/Manager who is informed of an instance of suspected fraud

or corruption is required to notify the Public Interest Disclosures

Coordinator (Manager Governance) for assessment of the matter as a

possible public interest disclosure.

•

If the Public Interest Disclosures Coordinator assesses the matter is not

a public interest disclosure, and refers it back to the Director/Manager,

the Director/Manager is then responsible for notification reporting to

the Chief Executive Officer, and any subsequent investigation of the

incident, and implementation of actions, as determined by the Chief

Executive Officer (or delegate).

•

Reports suspected fraud or corruption to their direct

supervisor/manager/director, or Public Interest Disclosures Coordinator

or a Public Interest Disclosures Officer.

•

Coordinates Council’s fraud and corruption resources, in accordance

with the Fraud and Corruption Control Framework,

•

Maintains the fraud and corruption register (including monitoring

appropriate mitigation measures to be implemented).

Fraud Reporting and Investigation Procedure

Page 4 of 9

•

Ensures the Public Interest Disclosures Policy and Procedure are

complied with when handling public interest disclosures.

•

When informed of an instance of suspected fraud or corruption is

required to assess the information and determine if it is an assessable

disclosure in accordance with the PID Act, and Council's PID Policy and

PID Procedure.

•

Handles reports of fraud and corruption by a discloser.

•

Director or Manager, or appropriate external investigator, appointed by

the Chief Executive Officer in writing is responsible for investigating

suspected fraud or corruption that is not a public interest disclosure.

•

Council officer who suspects or detects the fraud or corruption, or the

'source' of the information if an external person/supplier.

•

If the matter is referred for internal investigation, a written confidential

Notification Report will be provided by the Reporting Officer or Source.

•

Facilitates investigations of breaches of Part 6.1 of the Employee Code

of Conduct where it is suspected a Council officer has breached the

Code of Conduct, or where the Director/Manager has determined there

is enough evidence to warrant either a warning or dismissal.

•

At the direction of the Chief Executive Officer (or delegate) must

identify, secure, and release information relating to Council's financial

systems and transactions.

•

At the direction of the Chief Executive Officer (or delegate) must

identify, secure, and release Council surveillance footage and/or

security access records.

•

At the direction of the Chief Executive Officer (or delegate) must

identify, secure, and release information relating to GPS installed in

plant, equipment and fleet, where equipment is lost or stolen.

•

At the direction of the Chief Executive Officer (or delegate) must

identify, secure, and release information relating to Council's

Information Communication and Technology systems.

•

Repots any incidences of fraud or corruption to the appropriate insurer.

The Reporting Officer who suspects or detects fraud or corruption is required to

immediately report (verbal or in writing) the matter to their direct supervisor/ manager/

director or directly to the Public Interest Disclosures Coordinator (PID Coordinator) or a

Public Interest Disclosures Officer (PID Officer).

Where a Reporting Officer is concerned about making a report of fraud or corruption in

the workplace, they can request a meeting at a location away from the workplace.

Where a Reporting Officer has reported their concern to a Director/Manager, it is the

responsibility of the Director/Manager, to refer the matter to the PID Coordinator for

initial assessment.

Fraud Reporting and Investigation Procedure

Page 5 of 9

If the matter relates to a Councillor, it must be reported directly to the IBAC in

accordance with Council’s Fraud Prevention Policy and Public Interest Disclosures Policy

(PID Policy).

The PID Coordinator will, at first instance, assess whether the report meets the criteria of

an assessable disclosure.

If the report is found to meet the criteria of an assessable disclosure the report will be

referred to IBAC for further assessment, and Council’s PID Policy and PID Procedures will

apply.

If the PID Coordinator assesses that the matter is not an assessable disclosure, they will

refer it back to the Director/ Manager for internal notification and possible investigation.

The Director/Manager will then notify the Chief Executive Officer that a suspected

incident of fraud or corruption has been raised. The Director/Manager will then arrange

for a confidential Notification Report to be prepared for the Chief Executive Officer to

determine appropriate action, including a possible internal investigation.

The Reporting Officer will be required to prepare the Notification Report of the suspected

fraud or corruption. The Notification Report should be impartial and made in writing (can

be made using the Property Damage and Loss Report Form if appropriate) and contain

the following information (where applicable):

a. Date and approximate time of suspected fraud, or corruption

b. Location of the fraud or corruption

c. Description of what the Council officer saw/heard/detected

d. Who is involved

e. Description of the suspected fraud or corruption, including equipment or property

suspected of being stolen, details of any inconsistency in finances (e.g. invoicing).

f. Any evidence - including copies of documents and photographs

g. Any other relevant information

The Reporting Officer must submit the Notification Report in confidence to their

Director/Manager. The Notification Report should be submitted as soon as possible after

the suspected fraud or corruption has been assessed by the PID Coordinator not to be an

assessable disclosure. In certain circumstances, the Director/Manager of the Reporting

Officer may prepare the Notification Report in place of the Reporting Officer, but only

after speaking to the Reporting Officer.

The Notification Report will be treated as confidential, however it may be provided to the

following:

a. The Chief Executive Officer, Director, and Manager of Reporting Officer

b. Investigating Officer/Body

c. Manager People & Performance

d. PID Coordinator/ PID Officer/ Fraud Control Officer

e. Victoria Police

f. IBAC

g. Any other person or body required or permitted by law.

Fraud Reporting and Investigation Procedure

Page 6 of 9

In addition to the Notification Report, the Director/Manager may make discrete

preliminary enquiries to determine whether to conduct an internal investigation.

The Chief Executive Officer and Director will then discuss the Notification Report and any

preliminary enquiries, and determine appropriate action. This will include whether the

Chief Executive Officer, as Principal Officer, has reasonable grounds to suspect fraud or

corruption, and report the matter to IBAC for further assessment and direction. If the

Chief Executive Officer, as Principal Officer, determines to report the matter to IBAC (in

accordance with s.57 of the IBAC Act - Mandatory Notification), no further internal

investigation will proceed at this time.

If the Chief Executive Officer (or delegate) determines not to proceed with an internal

investigation, the decision, reasoning and process will be documented, and the outcome

confidentially communicated to the Reporting Officer.

If the Chief Executive Officer (or delegate) determines that an internal investigation is

required, an Investigating Officer will be appointed (Director/Manager/external

investigator) and will investigate the suspected fraud or corruption lawfully, and with

discretion.

The Investigating Officer will consider the Reporting Officer’s Notification Report and

conduct the internal investigation - informed by the

- that may include:

a. Taking photographs or video evidence (where applicable)

b. Restricting access to the area (where applicable or practical)

c. Requesting (through the Chief Executive Officer or delegate) the Building

Maintenance Coordinator, to identify, secure, and release to them relevant

surveillance footage or security access records (where available)

d. Requesting (through the Chief Executive Officer or delegate) the Fleet Services

Unit Manager to identify, secure, and release to them relevant GPS information

for plant, equipment and fleet (where available)

e. Requesting (through the Chief Executive Officer or delegate) the Information

Communication and Technology Strategy and Delivery Lead to identify, secure,

and release to them relevant information from Council's Information

Communication and Technology systems (where available)

f. Requesting other relevant Council officers to make a report, where practical and

prudent

g. Making any other enquiries necessary or relevant to the incident, including

interviewing potential witnesses and/or affected persons

h. Auditing any systems such as Petty Cash, Purchasing Cards, Purchase

Orders/Vendors, Payroll Systems, as required

i. Notifying the Fraud Control Officer/Risk Management and Insurance Coordinator

to liaise with Council's insurers, including activating Council's cyber risk insurance

support services

j. Discussing the matters contained in the Notification Report with the person/s

suspected of fraud or corruption (at the appropriate time).

Fraud Reporting and Investigation Procedure

Page 7 of 9

When conducting an investigation, the Investigating Officer must ensure the

confidentiality of the process - including safeguarding any evidence and keeping all

information secure and confidential, not releasing any identifying information, and not

discussing the matter with any other person other than those involved in the

investigation.

The Investigating Officer will direct the Reporting Officer and any other interviewees to

maintain confidentiality. This is important, to:

a. Safeguard evidence that may otherwise be destroyed

b. Prevent damage to reputations from as yet unproven allegations

c. If the matter subsequently becomes a Public Interest Disclosure (new evidence

submitted by a Reporting Officer), ensuring the matter remains confidential will

allow the Reporting Officer to qualify for the protections under the PID Act.

The principles of natural justice and procedural fairness will be applied during the

investigation. Support services will be offered to Council officers where appropriate.

At the completion of the internal investigation, the Investigating Officer will prepare a

confidential Investigation Report. The Investigation Report will include the process,

analysis, findings, and recommendations, and any supporting documentation or

evidence. The Investigating Officer will provide the report to the Chief Executive Officer,

for discussion and determination of appropriate action (with relevant Director).

The Chief Executive Officer (or delegate) will make a decision on how to proceed and

determine appropriate action, including advising IBAC, Victoria Police and Council's

insurers.

The Chief Executive Officer (or delegate) will also determine appropriate security or

mitigation measures to prevent similar incidences of fraud or corruption in the future.

If the internal investigation reveals that fraud or corruption has been committed by a

Council officer, the Chief Executive Officer (or delegate) in consultation with the Manager

People and Performance will direct the appropriate action to be undertaken, including any

disciplinary action in accordance with Council’s Disciplinary Policy and Procedure. The

severity of the action will depend on the circumstances of fraud or corruption, but can

include dismissal and prosecution by the relevant enforcement authorities.

The Fraud Control Officer will maintain a confidential fraud and corruption register, which

will include monitoring of actions and appropriate mitigation measures to be

implemented in response to an incident of fraud or corruption.

The Chief Executive Officer will report all confirmed incidences of fraud or corruption that

are not public interest disclosures, to Council’s Audit and Risk Committee.

The Chief Executive Officer will report:

Fraud Reporting and Investigation Procedure

Page 8 of 9

a. Any suspected corrupt conduct to IBAC (mandatory reporting)

b. Confirmed incidences of fraud or corruption to the Audit and Risk Committee (that

are not public interest disclosures)

Corruption:

dishonest activity in which a person associated with

an organisation (e.g. director, executive, manager,

employee or contractor) acts contrary to the

interests of the organisation and abuses their

position of trust in order to achieve personal

advantage or advantage for another person or

organization. This can also involve corrupt conduct

by the organisation, or a person purporting to act on

behalf of and in the interests of the organisation, in

order to secure some form of improper advantage for

the organisation either directly or indirectly.

Fraud:

Dishonest activity causing actual or potential loss or

loss to any person or organisation including theft of

moneys or other property by persons internal and/or

external to the organization and/or where deception

is used at the time, immediately before or

immediately following the activity.

Natural justice:

A principle of Common Law that says a person has

the right to be:

•

informed about the substance or the allegations

against them

•

given the opportunity to answer the allegations

before a final decision is made

•

informed about the substance of any adverse

comment that may be included in an investigation

report and have their defence fairly included in the

report.

Public interest disclosure:

Any complaint, concern, matter, allegation or

disclosure (however described) purported to be made

in accordance with Part 2 of the PID Act. A public

interest disclosure is one which is made by a natural

person or group of people who has reasonable

grounds for the belief that a public officer or public

body has engaged in, or intends to engage in

improper conduct in their official capacity, or

detrimental action.