Fraud and Corruption Control

Policy

This policy outlines school staff obligations on preventing, detecting and responding to fraud and corruption in Victorian government schools consistent with the department-wide Fraud, Corruption and Other Losses Control policy (DOCX).

Summary

• The department does not tolerate fraud or corruption.
• Instances of fraud or corruption significantly impact schools and the department by causing financial loss and reputational damage.
• The department requires all employees and contractors to act honestly and with integrity, and to safeguard the public resources for which schools and the department are responsible.
• The department’s Fraud and Corruption Control Unit receives, assesses and investigates reports of suspected fraud and corruption.
• All employees must report suspected fraud or corruption in the department and schools. The department’s Fraud and Corruption Control Unit will assess all reports it receives to ensure employees are provided with public interest disclosure protections where applicable.

Details

What is fraud and corruption?

Fraud

Fraud is dishonest activity causing actual or potential financial loss to any person or entity including theft of moneys or other property by employees or persons external to the entity and where deception is used at the time, immediately before or immediately following the activity.

This also includes deliberate falsification, concealment, destruction or use of falsified documentation used or intended for use for a non-business purpose or the improper use of information or position for financial benefit.

Corruption

Corruption is dishonest activity in which a director, executive manager, manager, or employee or contractor of an entity acts contrary to the interests of the entity and abuses his/her position of trust in order to achieve some personal gain or advantage for him or herself or for another person or entity.

Preventing fraud and corruption

Principals are responsible for demonstrating their commitment to building and maintaining an ethical culture in their school, modelling the department’s values, treating risks of fraud, corruption and other losses effectively and creating an organisational environment hostile to fraudulent and corrupt behaviour.

All employees, contractors, volunteers and school council members are responsible for reducing the risk of fraud, corruption and other losses by:

• understanding and applying the department’s policies, procedures and guidelines, such as the finance manual and guidance and the policies and guidelines on conflicts of interest, procurement, recruitment and managing misconduct
• reporting all cases of suspected internal and external fraud and corruption perpetrated against schools and/or the department
• maintaining the security of school and the department’s money and assets.

Reporting fraud and corruption

All employees are required by law (under the Public Administration Act 2004 (Vic)) to report activities they suspect might be fraud or corruption.

If you make a report, the report may meet the requirements of the Public Interest Disclosures Act 2012 (Vic) (the Act) and you may be entitled to public interest disclosure protections under the Act.

Suspected fraud and corruption should be reported to the department’s Fraud and Corruption Control Unit by phone 03 7022 0121 or email fraud.control@education.vic.gov.au

Employees can also make reports:

• to their principal or manager, who should discuss the report with the Fraud and Corruption Control Unit; or
• via the department’s Speak Up service, a 24 hour, independently managed service available to take reports from employees about possible fraud, corruption or serious misconduct. Speak Up can be contacted on 1800 633 462.

Principals have additional obligations under the Independent Broad-based Anti-corruption Commission Act 2011 (Vic) as executive officers of school councils to report any suspected corrupt conduct in relation to school councils and school council employees to the Independent Broad-based Anti-corruption Commission (IBAC). The Fraud and Corruption Control Unit will support principals to meet this obligation.

For information on how to raise a concern or complaint about the workplace more generally, refer to: Complaints – Information for Employees.

How reports are managed

The Fraud and Corruption Control Unit assesses all reports to consider whether the report:

• may be a public interest disclosure under the Public Interest Disclosures Act 2012 (Vic), which provides disclosers with protections from reprisals, and requires strict confidentiality of these reports be maintained
• must be notified to IBAC
• should be notified to Victoria Police
• should be referred to another area of the department for action
• should be investigated by the Fraud and Corruption Control Unit.

Related policies

• Code of Conduct
• Complaints – Information for Employees
• Complaints, Misconduct and Unsatisfactory Performance – Teaching Service
• Conflict of Interest
• Department's Fraud, Corruption and Other Losses Control policy (DOCX)
• Grievances – Teaching Service

Relevant legislation

• AS8001-2021 Fraud and Corruption Control Standard
• Audit Act 1994 (Vic)
• Education and Training Reform Act 2006 (Vic)
• Education and Training Reform Regulations 2017 (Vic)
• Financial Management Act 1994 (Vic)
• Financial Management Regulations 2014 (Vic)
• Independent Broad-based Anti-corruption Commission Act 2011 (Vic)
• Instructions Supporting the Standing Directions of the Minister for Finance 2018
• Public Administration Act 2004 (Vic) and the Code of Conduct for Public Sector Employees
• Public Interest Disclosures Act 2012 (Vic)
• Standing Directions 2018 under the Financial Management Act 1994

Fraud and Corruption Control in Schools — Implementation Guidance

Schools are obliged to ensure they implement fraud and corruption controls. This guidance provides a checklist for some of the fraud and corruption risks commonly encountered in schools and the types of controls that can assist in addressing these risks. Staff should report all suspected fraud and corruption to the Department’s Fraud and Corruption Control Unit on 03 7022 0121.

Key risks and controls

The Department’s Fraud, Corruption and Other Losses Control Policyrequires principals to ensure that fraud and corruption risks in their school are identified and controls put in place to mitigate those risks. Fraud and corruption risks in schools often arise in relation to:

• cash handling
• procurement
• finance
• assets
• employment

The first step to control these risks is to comply with the Department’s policies and guidelines (including the Finance Manual, procurement policies and Human Resources policies).

This Fraud and Corruption Control in Schools Implementation Guidance may also assist schools in identifying risks and controls relevant to them and can be adopted as appropriate.

Checklist of risks and controls

Cash and finance

Risks

Cash and finance fraud and theft risks include:

• misappropriation of cash
• misappropriation of funds through bank transfers
• misuse of corporate cards
• falsification of finance records to disguise theft

Controls

• When developing, reviewing and implementing the school’s Cash Handling policy, ensure it deals with:
  • limiting the use of cash where practicable
  • transparency and oversight of cash handling
  • specific controls for fundraisers, such as fetes and so on and including physical security of cash and strong cash handling procedures.
    Note: A template Cash Handling policy is available on the School Policy Templates Portal (login required). Schools can modify the template to suit their local circumstances.
• maintain key finance controls including:
  • segregation of duties
  • appropriate bank signatories and;
  • security of bank account and finance system credentials
• implement and maintain appropriate policies for petty cash and local reimbursements
• restrict school purchase cards to staff approved by School Council and ensure that Undertaking by Cardholder is complied with
• ensure physical security of cash and keys

Seek guidance from School Finance Liaison Officers on implementing controls for any other finance risks identified.

Employment, conduct and recruitment

Risks

Employment, conduct and recruitment fraud and corruption risks include:

• incomplete or inaccurate information presented by employee during recruitment process
• falsified medical certificates provided in support of leave applications
• misappropriation via payroll payments
• failure to process leave applications resulting in overpayments

Controls

When recruiting:

• undertake thorough referee checks to elicit information about the applicant’s ability to perform the essential functions of the role and to verify an applicant’s claims
• validate employment history
• ensure current or immediate past employer is contacted to confirm the preferred applicant is suitable for child-connected work and is a fit and proper person (questions are set out in the Recruitment in Schools Guide)
• ensure at least one member of the panel is a person trained by the Merit Protection Boards in the principles of merit and equity

Ensure:

• any conflicts of interest are identified at the earliest opportunity in any recruitment process and an appropriate management plan is developed, documented and approved in the eduPay Conflict of Interest Register
• any conflicts of interest in the management of employees (such as where a principal’s family member is employed at the school) are declared, an appropriate management plan is developed and periodically reviewed, and that the declaration and plan are recorded and approved using the Declaration – Conflict of Interest form in eduPay
• supporting evidence is provided when personal leave with certificate is claimed. If you identify inconsistencies or concerns with the certificate consult with Employee Conduct Branch for advice
• payroll transactions are reviewed and validated
• transparency over key functions at risk of fraud and corruption, such as receipting and banking. Reluctance to provide transparency over these functions, including unwillingness to take leave or to rotate duties with other administration staff (where appropriate), can be a red flag that something is not right
• eduPay administrator access is regularly reviewed and ensure it is limited to only those required to have access
• processes are developed for ensuring all approved leave is processed

Procurement

Risks

Procurement fraud and corruption risks include:

• misusing position to award contracts for personal gain
• decisions influenced by gifts, benefits or hospitality
• misappropriation by third parties redirecting invoice payments (usually through email compromise)

Controls

Ensure:

• staff engaging in procurement undertake training and are aware of (and access) available supports
• all suppliers offers of gifts, benefits and hospitality are refused
• any identified conflicts of interest are appropriately managed
• all procurement activities are designed to ensure value for money. Consider the full value of the procurement activity, rather than individual transactions, when determining the appropriate procurement process.
• supplier bank accounts are verified, both on engagement and at any time they are updated, through multiple communication channels (e.g. phone and email)
• duties at various stages of the procurement process are segregated – e.g. use different people to approve and receive goods/services
• due diligence is conducted to establish legitimacy of suppliers (e.g. checking details on tenders and quotes, conducting ASIC searches to identify possible links between prospective suppliers and employees, or whether entities have appropriate assets or business facilities)
• variations in contracts and project scope after approval are maintained
• the maintenance of robust contract management and oversight to enforce contractual terms, milestones and deliverables
• staff sign invoices to verify goods and services have been received and ensure they are checking quality

Assets

Risks

Asset fraud, corruption and theft risks include:

• theft of assets
• purchasing and disposal decisions made to obtain a personal benefit

Controls

Ensure:

• staff engaging in procurement undertake training and are aware of (and access) available supports
• physical security of assets and keys
• processes for purchasing and disposal of assets are not influenced by prospect of personal gain
• any incidents of theft or other losses are reported to police and to the Fraud and Corruption Control Unit

Resources

Whole-of-department policy and guide

For whole-of-department systems and processes for preventing, detecting and responding to fraud and corruption refer to:

• Fraud, Corruption and Other Losses Control Policy
• Fraud, Corruption and Other Losses Control Operational Guide

The operational guide supports the policy; together they set out the department’s approach to the management of fraud and corruption risks. The operational guide sets out the actions the department takes to prevent, detect and respond to fraud and corruption.

Speak Up service

Speak Up supports staff who don't feel comfortable raising their concerns directly with the department. Speak Up is a 24-hour externally hosted hotline to report concerns about suspected fraud, corruption and improper conduct. Reports to the Speak Up service can be made anonymously. All reports are provided to the department’s Fraud and Corruption Control Unit for assessment.

Refer to Education Speak Up service for further information.

Training

For an introduction to fraud and corruption, refer to the Fraud and Corruption Control animated video which can be found on the department’s Vimeo channel. This tool helps staff to understand the department’s fraud and corruption obligations and engage colleagues in discussions at team meetings, inductions and in performance and development plan conversations to reduce the risk of fraud and corruption in the department.

To learn more about how to identify and report fraud and corruption, complete the Fraud and Corruption Control eLearn module (staff login required). This module is available on LearnEd in eduPay.

Fact sheets

• Independent Broad-based Anti-Corruption Commission (IBAC) investigations — broadly explains the function of IBAC and the role of the department.
• Information for reporters and witnesses — explains what it means and what can be expected when either reporting an allegation of fraud or corruption or where you have been identified as a witness in a fraud or corruption inquiry or investigation.
• Information for respondents — explains what it means if you are the subject of an allegation of fraud or corruption and outlines what can be expected.
• Public interest disclosures — provides information for reporters and managers on what it means when where a report about improper conduct is deemed a Public interest disclosure (PID).
• Victorian Ombudsman investigations — information on the role of the Ombudsman and the office’s relationship with the department and the Fraud and Corruption Control Unit (FCC).

Other resources

• The Guide for Managers — Employee Conduct Branch (ECB) and the Fraud and Corruption Control Unit has been developed to support managers and principals in assessing what to report, how and when to report and who to report to: Guide for Managers — Employee Conduct Branch (ECB) and the Fraud and Corruption Control Unit
• The Integrity frequently asked questions (FAQs): Mandatory notifications to IBAC provide information on principal officers’ obligations to mandatorily report to IBAC where they suspect activities that involve corrupt conduct: Integrity FAQs: Mandatory Notifications to IBAC
• These procedures provide guidance on the way the department meets its legislative obligations in relation to public interest disclosure: Making, handling and managing public interest disclosures
• IBAC’s ‘Speak up to stop it’ resources provide guidance and information to encourage the Victorian public sector to speak up to stop improper influence