Post on 28-Dec-2015
Presentation
CIFAL PRESENTATION
Date: 13 JUNE 2012
Place : Durban
Ugu District Municipality
Whistle Blow and Fraud Presentation
AGENDA
• Introduction • Definition of Fraud• Fraud Triangle• Definition of Corruption • Types of Fraud and Corruption• Dealing with Fraud • Fraud Red Flags• Legal Framework • Protected disclosure Act• Questions
Introduction and Fraud Definition
Introduction
The purpose of this presentation is to provide Ugu District Municipality employees and other stakeholders with the essential information regarding Ugu District Municipality anti-corruption campaign.
Definition of Fraud
Fraud is an unlawful and intentional making of misrepresentation
which cause actual or and potential prejudice to another person.
Fraud Triangle
PressureOpportunity Rationalisation
Definition of Corruption
Definition of Corruption
Corruption is a conduct or behaviour where a person accepts or agreeor offers any gratification for him/herself or for another person wherethe purpose is to act dishonestly or illegally.
Examples of CorruptionBriberyExtortionAbuse of powerConflict of interestFavouritismNepotismFavouritism etc.
Dealing with Fraud
Preventative• Fraud Risk Assessment• Internal Control• Fraud Awareness Training• Fraud Hotline• Fraud Prevention plan• Pre-employment Screening• Management Commitment
Dealing with fraud (continue)
Fraud Detection• Internal Audit• External Audit• Incident/Exception Reports• Whistle Blower
Fraud Response• Investigation • Reviewing of system and procedure• Disciplinary Hearing• Asset Recovery• Providing Information to third parties
Fraud Red Flags
Employees Red FlagEmployees lifestyle changes: expensive cars, jeweleries etcSignificant personal debt and credit problemBehavioral changes: drugs, alcohol etcRefusal to take vacation leaveLack of segregation of duties
Management Red FlagReluctance to provide informationManagement engage in frequent dispute with auditorsManagement decision are dominant by individual and small groupWeak internal controlDecentralization without adequate controlFrequent change of External AuditorsCompany assets sold under market valueContinuous rollover of Loans
Red Flags (continue …)
Payroll Inconsistence overtime hours workedOvertime charged during a slack period Overtime charged for employees who normally do not worked overtimePayroll budget variation Employees with statutory deduction only
PurchasingLack of physical securityVendors without physical addressPurchases that bypass normal procurement proceduresHigh purchase from new vendorPurchases from vendors who are not on approved list
Red Flags (continue)
Change in Behavior
Borrowing money from co-workersGambling beyond the ability to stand the lossExcessive drinkingProviding unreasonable responseCarrying unusual some of moneyCreditors or collectors appearing at the work place
Cash or Accounts Receivable
Excessive number of void transactionUnauthorised Bank AccountDiscrepancies between bank deposits and posting
Other Fraud Signals Supporting document not found when requested
Using of duplicate invoice
Usage of pro forma invoice
Cash Lobbing
Increase in customer complaints
Cancellation of cash transaction
Criminal records
Failure to discipline violators
IT SHOULD BE NOTED THAT RED FLAGS ARE WARNINGS THAT
SOMETHING WRONG COULD TAKE PLACE. LITLE FRAUD
SOON BECOME LARGE.
Legal Framework
Corruption Act, 94 of 1992.
Protected Disclosure Act.
Code of Conduct.
Anti-Fraud and Corruption Policy of Ugu District Municipality.
Access to Information Act.
Corporate Governance.
Aunt-Money Laundering Act.
Financial Intelligent Centre Act.
MFMA.
PFMA
KING 3
Protected Disclosure Act
The protected Disclosure Act,26 0f 200 makes provision for the
protection of employees who make a disclosure that is protected in
terms of this act. Any disclosure made in good faith and sustainably in
accordance with any procedure prescribed by the employee’s employer
for reporting is considered a protected disclosure under this Act. An
employee making protected disclosure is protected from victimisation.
It should be noted that this Act does not protect false disclosure.
Thank You