How Universities should investigate a complaint under the disciplinary procedure
There has long been a call to make the reporting of fraud a compulsory requirement, akin to the suspicious activity reports regime in money laundering, so that we have a full picture of the amount of fraud that goes on. This has been resisted by companies thus far but as a result we only have snapshots of how bad the problem is. A recent PwC Economic Crime Survey found that 56% of fraudsters were employees, committing frauds from the inside against their employers. An anti-fraud culture is one that goes hand in hand with other good practices that should be part of a company’s general compliance but while companies are undoubtedly focussing on anti-bribery measures and most already have good AML systems, internal fraud prevention seems to be lagging behind.
2014 internal fraud figures published by the Credit Industry Fraud Avoidance System (Cifas) - The UK's Fraud Prevention Service, underline the importance of detecting potential fraudsters early, before they get into your organisation. Although Cifas relies on companies to opt in and share data, its multi-sectoral membership makes it a good barometer of the current incidence and type of fraud being perpetrated within companies. In their sample well over half of the frauds reported were those where the employer had detected fraud in the information submitted in the job applications. Some got through the process successfully (77 out of 473 applications) and were found out later, but the majority were attempts which were prevented by good employee vetting procedures. Once in, the reported data showed staff taking advantage of their positions by dishonestly obtaining a benefit for themselves by theft or by deception. The reported figures were down this year compared to the previous one, but the incidence is still not far short of a third of the reported cases. The other types of fraud they analysed were unlawful obtaining or disclosure of personal and commercial data, account fraud and bribery.
The cost of fraud to a company is of course much higher than the actual amount obtained by an employee. Research carried out by the University of Portsmouth on behalf of Cifas estimates that the percentage increase on the initial loss can be as much as 265% because of the costs associated with the investigation, suspension and replacement of staff. While many companies chose to keep the discovery of fraud private, we have noticed an increasing trend in companies considering private prosecutions against ex-employees, particularly when the police do not have the resources to take it on. Taking this route can mean recovery of the sums defrauded without the necessity of parallel civil proceedings and it also means that employees who are convicted will find it difficult to obtain positions of trust again - doing a favour to the public at the same time. Prosecuting the case rather than hiding it also sends a powerful message to employees that the management will not tolerate fraud. It encourages employees with suspicions about colleagues to be able to share them and it signals to the public at large that the company is now a well-run one. Exposing fraud and dealing with it nowadays signifies strength and responsibility and should enhance a company’s reputation rather than detract from it.
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