Use of staff and assets for private purposes
Authority over staff and access to assets can be misused for personal gain.
Risk type: Practice
Risk driver: Internal
Under certain conditions the staff of water sector organizations may be allowed to privately use the assets of the organization as part of their benefit package. They can access vehicles or land and use them for example to support political campaigns, for private travel, or to hold events. However, the illicit use of assets is a common risk. This may include stealing office supplies or pipes to resell them; illicitly using company cars, fuel, and drivers for private transportation; using materials and staff belonging to the organization to build a private house; and so on. Such practices are usually enabled by insufficient monitoring and the lack of an inventory system to keep track of utility assets. Furthermore, larger misuse by senior management may also have a bad influence on the behaviour of junior staff. Unsatisfying employment conditions as well as a lack of transparency in remuneration processes may lead to further illicit practices by staff.1
In addition, decision makers and managers may misuse their authority to order staff to handle other tasks that are of a private nature, like private business ventures or favours to friends and relatives.
- Vehicle log books are not maintained in an appropriate level of detail.
- A staff member always claims to be busy with tasks for the same person.
- There are high recurrent procurement needs of office supplies that are unexplained by the actual work done in the office.
- Money, equipment, or materials frequently disappear from within the organization’s premises.
- Asset registers are not kept up to date.
- There is unreasonably high consumption of goods such as fuel or spare parts in some departments.
- Computers, printers, or even cars are repeatedly claimed as defective without clear rules about what happens with them.
KEY GUIDING DOCUMENTS
SME Toolkit Zambia, no year, Preventing Employee Fraud, adapted from content excerpted from American Express®, SME Toolkit Zambia, OPEN Small Business Network, http://zambia.smetoolkit.org/zambia/en/content/en/727/Preventing-Employee-Fraud, accessed 15.10.2015
Poor asset records2
A number of items of computer equipment had been removed, and apparently stolen, from a council’s information technology (IT) area. An audit of the assets database found that the records concerning the purchase of this equipment had been deleted. The limited employee access to this database indicated that the equipment had been stolen by someone working in the IT area, who had then attempted to cover up the theft by deleting the purchase records. The council interviewed employees but was unable to identify the person responsible.
Voucher issuing process vulnerable to fraud 2
During an audit of its meal voucher system an agency found discrepancies in the distribution and approval of the vouchers within a particular unit. An investigation found that an employee within the unit had taken meal vouchers on several occasions without permission, and had signed her manager’s name in an apparent attempt to conceal her conduct. The agency reviewed the process for obtaining and issuing meal vouchers and instituted changes including keeping the vouchers locked up and restricting access.
- SME Toolkit Zambia, no year, Preventing Employee Fraud, adapted from content excerpted from American Express®, SME Toolkit Zambia, OPEN Small Business Network, http://zambia.smetoolkit.org/zambia/en/content/en/727/Preventing-Employee-Fraud, accessed 15.10.2015
- ICAC, no year, Management of resources, Independent Commission Against Corruption New South Wales (ICAC), http://www.icac.nsw.gov.au/preventing-corruption/knowing-your-risks/management-of-resources/4915, accessed 11.11.2015