Schools Financial Value Standard SFVS Schools Antifraud and

Schools Financial Value Standard (SFVS) Schools Anti-fraud and Corruption Sept 2012

Introduction • Welcome • Housekeeping

Workshop Introduction • All Governors should now be aware of the Schools Financial Value Standard (SFVS) • SFVS was launched by the Df. E in September 2011 and replaces the Financial Management Standard in Schools (FMSi. S) which was withdrawn in November 2010 • SFVS is an annual assessment of 23 questions. These questions need to be formally discussed answered by Governors • Question 19 of the SFVS relates to the school’s arrangements against fraud or theft, this is primarily what we are covering in today’s workshop

SFVS Question 19 Are there adequate arrangements in place to guard against fraud or theft by staff, contractors and suppliers (please note any instance of fraud or theft detected in the last 12 months)?

SFVS Question 19… • Df. E are advising that in order to answer this question, ‘schools need a robust system of controls in place to safeguard themselves against fraudulent or improper use of public money and assets. ’ • Internal Audit recommend that schools have a robust anti-fraud and corruption framework in place

School Anti-Fraud and Corruption Framework

What is Fraud and Corruption? Fraud and corruption includes: - • Fraud • Theft • Bribery All are serious offences under the law

Definitions Fraud – involves a dishonest act in some form or an abuse of position or knowledge to either cause a loss to others or make a gain for themselves or a related party. It is more than theft as it involves some form of representation that the person knows is false or likely to be false. Examples – False time recording, false or exaggerated expense claims

Definitions Theft – the stealing of goods, property or an idea from another, meaning to keep it for themselves or to cause a disadvantage to another. Examples – stealing cash, equipment, an idea All include dishonesty!

Definitions Bribery – giving or accepting a benefit to induce the receiving party to mis-perform a function. Examples – bribing someone to disclose the submitted quotes of other competitors in a tendering exercise NB – there is a corporate offence of failing to prevent bribery. As a Governor it is YOUR responsibility to ensure controls are in place to prevent bribery and to ensure staff are trained to prevent bribery.

Application of School Anti-Fraud and Corruption Framework • Adopting • Anti-Fraud and Corruption Policy • Anti-Fraud and Corruption Strategy • Ensure Key Procedures are in place • Codes of conduct, School Financial Regulations, Declarations of Interest, Whistleblowing etc • Ensure controls are in place • Internal Audit – give schools independent assessments of controls in place. Check what was stated regarding internal control arrangements at the school in the last Internal Audit Report. If there were control issues have these been addressed?

Application of School Anti-Fraud and Corruption Framework • Ensure controls are in place… • Internal control checks The Df. E suggest these checks; • Financial Management Checks • Separation of duties • Spot checks on systems and transactions • Investigation and logging of every incident of irregularity, including instances of attempted fraud • Pre-employment checks on staff who will have financial responsibilities • Making staff members’ financial responsibilities clear in written job descriptions and procedures

Application of School Anti-Fraud and Corruption Framework • Ensure controls are in place… Internal audit suggest these checks also; • Procurement and tendering • Preventative IT system controls, i. e. Individual passwords and user accounts, rotating/changing passwords • Audit trails for changes to documents, records or transactions • Smartwatering of assets • Assets/stock inventories • Stock reconciliations • Authorisation processes • Active monitoring of declarations of interest

Application of School Anti-Fraud and Corruption Framework • Ensure controls are in place… Statement of Internal Control (SIC) • A requirement in Schools Financial Regulations is that the Governing Body ensure that the school assesses compliance with financial controls annually. The results should be incorporated into the statement of internal control which is signed by the head teacher, Chair of the Governing Body and Chair of Finance Committee. • Are any control issues raised on the SIC statement? Has an action plan been prepared to deal with the issues? • The SFVS supports the SIC but does not replace it.

Whistleblowing • Whistleblowing is a specific policy highlighted in the Anti-fraud and Corruption framework • Question 20 of the SFVS requires Governors to ensure whistleblowing arrangements are in place at their school. • Whistleblowing is the confidential raising of problems or concerns within an organisation. It provides protection for individuals who disclose malpractice and wrongdoing.

Whistleblowing • Whistleblowing allows individuals to report such matters as unlawful acts, wrong-doing and victimisation confidentially. • All schools should have a whistleblowing policy that has been reviewed and monitored on an annual basis and also approved by the Governing Body. • There is a whistleblowing policy and procedure for schools which is available on the website http: //www. doncaster. gov. uk/Images/Whistleblowing%20 Policy%20 a nd%20 Procedures%20 for%20 schools_tcm 2 -62509. pdf

Whistleblowing • The policy covers; • Safeguards, i. e. protection of the whistleblower, confidentiality, anonimity • Raising Concerns • The response of the Governing Body or LA • The responsible officer • Review and monitoring • It states who at the school and local authority staff can report concerns to. • All staff should be made aware of the whistleblowing process in place at the school.

Whistleblowing • The environment/culture in place at the school should make staff comfortable enough to be able to report concerns. • The Chair of Governors acts as the Monitoring Officer in a school and has responsibility for the maintenance and operation of the policy. The Chair should maintain a record of concerns raised and their outcomes, this should be reported to the Governing Body as necessary. • If the Whistleblowing policy has not been adopted, ask how many issues have been raised at your school.

Identifying potential issues/fraud indicators - Refer to separate document Fraud Risks - Refer to separate document Identifying potential issues/fraud indicators - Refer to separate document

What to do if you suspect / detect fraud or corruption DO üContact Internal Audit Services for advice üIf it relates to an employee, also contact HR for their advice A joint strategy meeting will be set up to discuss the concern and determine how to proceed and who should investigate the concerns. DON’T û Play detective! – Depending on the nature of the concerns, you may do more damage than good by investigating. Evidence can be destroyed! There may be irreparable damage to employee relations

Checklist • Adopt the Anti-fraud and Corruption policy • Adopt the Anti-fraud and Corruption strategy • Ensure the key policies and procedures have been adopted, including whistleblowing policy • Identify fraud risks • Verify the internal control arrangements that are in place at the school covering the above fraud risks, identify actions to address weaknesses • Ensure staff are aware of the policy, strategy and other key procedures, including whistleblowing policy

Checklist… • Ensure staff receive adequate training regarding Anti. Fraud and corruption – complete the Deloitte fraud awareness training which can be provided by Internal Audit • Monitor fraud register • Report fraud register items to Governing Body • Provide progress report to Governing Body of school’s anti-fraud arrangements

What support is available • Contact Internal Audit Team for help and assistance with fraud issues - 01302 862934 Email address - Schools. Internal. Audit@doncaster. gov. uk • DMBC website – www. doncaster. gov. uk • Df. E website – www. education. gov. uk/schools

ANY QUESTIONS ? ? ? ?

Identifying potential issues/fraud indicators • Behaviours that could indicate fraud; • • Staff not taking leave Staff who work outside of normal working hours Changes in staff financial circumstances Lifestyles inconsistent with position Staff not attending work Unusual behaviour Staff not delegating Staff who seem disproportionately concerned about visits from senior management, inspectors or auditors • Secretive employees

Fraud Risks Some examples of fraud risks; • Retaining cash collected for school dinners • Claims for un-worked overtime • Unauthorised purchase of equipment for personal use • Improper use of petty cash for personal purposes • Not charging for school rooms used for private functions • Processing false invoices for goods or services not • • received and pocketing the proceeds Making false entries on the payroll, such as inventing a fictitious employee and arranging to be paid an additional salary Payment of inappropriate bonuses

Fraud Risks Some examples of fraud risks… • Misusing school financial systems to run a personal • • • business Employing a family member or individual known personally to a member of staff without following appropriate recruitment procedures Buying from a supplier or contractor known personally to a member of staff without following required procurement procedures or declaring a business interest Separating purchases to avoid tendering thresholds Suppliers or contractors failing to deliver the agreed goods or services but still being paid in full Claims for travel which did not take place

Identifying potential issues/fraud indicators • Other fraud indicators. . . • Problems with balancing accounts i. e. voluntary funds • Decreasing income collection rates i. e. reduction in uniform sales, school dinner sales • Employees who break the rules or fail to comply with existing procedures • Employees who cut corners • Poor internal controls • Undocumented processes and activities that are only known to one individual • Deliveries of items or stocks to somewhere other than the school