Anti Fraud and Corruption Policy 2021 to 2022
13. Appendix C
Fraud Indicators
A number of frauds can come to light because of suspicions aroused by, for instance, the behaviour of certain individuals. It is impossible to give a definitive list of fraud indicators or warning signs. The following are types of risk factors that may, either alone or cumulatively with other factors, suggest the possibility of fraud and may therefore warrant further investigation or enquiry.
- Unusual employee behaviour:
- refusal to comply with normal rules and practices
- fails to take leave
- refusing promotion
- managers by-passing subordinates
- subordinates by-passing managers
- living beyond means
- regularly working long hours
- job dissatisfaction or unhappy employee
- secretiveness
- undue defensiveness
- Financial irregularities:
- key documents missing (for example invoices, contracts)
- absence of controls and audit trails
- missing expenditure vouchers and official records
- general ledger out of balance
- bank and ledger reconciliations are not maintained or cannot be balanced
- excessive movements of cash or transactions between accounts
- numerous adjustments or exceptions
- constant overdue pay or expense advances
- duplicate payments
- ghost employees on the payroll
- large payments to individuals
- excessive variations to budgets or contracts
- multiple payments under authorisation thresholds
- Bad procurement practice:
- too close a relationship with suppliers and or contractors
- suppliers and or contractors who insist on dealing with only one particular member of staff
- unjustified disqualification of any bidder
- lowest tenders or quotes passed over with minimal explanation recorded
- defining needs in ways that can be met only by specific contractors
- single vendors
- vague specifications
- splitting up requirements to get under small purchase requirements or to avoid prescribed levels of review or approval
- missing documents and or contracts
- Disorganisation:
- understaffing in key control areas
- consistent failures to correct major weaknesses in internal control
- inadequate or no segregation of duties
- frequent complaints
- Inadequate supervision:
- policies not being followed
- lack of senior management oversight
- inadequate monitoring to ensure that controls work as intended (periodic testing and evaluation)
- low staff morale
- weak or inconsistent management
- Lax corporate culture:
- management frequently override internal control
- climate of fear
- employees under stress without excessive workloads
- new employees resigning quickly
- crisis management coupled with a pressured business environment
- high employee turnover rates in key controlling functions
- Poor work practices:
- lack of common sense controls
- work is left until the employee returns from leave
- post office boxes as shipping addresses
- documentation that is a photocopy or lacking essential information
- lack of rotation of duties
- unauthorised changes to systems or work practices