2.01.010_Fraud in the WorkplacePolicy M 2.01.010
Type: City Council
Effective Date: 2009
Former Policy #: 440.71
13
CITY OF ROHNERT PARK
OFFICE OF THE CITY CLERK
NOTICE OF COUNCIL/CDC/RPFA ACTION
Meeting
Votice
Copy to: --7
File (s): POLICY BINDER Human Resources Policy 440.71 - Fraud in the Workplace
SUBJECT FILE: Finance Department - Miscellaneous
Council Agenda Chron
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TERRI GRIFFIN, DEPUTY CITY CLERK
for JUDY HAUFF, CITY CLERK
Agenda Packet Preparation TIMELINES for Regular City Council Meetings {This section for City Clerk Use Only)
held on the 2"d & 0' Tuesdays of each month:
• Resolutions (other than standard formats for authorizations and approvals), Ordinances &
Agreements to Assistant City Attorney via email for review and approval as to form DUE no 12/18/09 City Council
" ter than NOON Three (3) Mondays prior to Council meeting date Special Meeting Agenda
Benda items to City Manager via email for his review and responding "email authorization",
synchronized with above timeframe of Assistant City Attorney review, and an email copy to the ITEM NO. 7
City Clerk for drafting agendas
• Agenda Items w/attachments via email and twenty (20) complete hard copy sets with 2 sets RESOLUTION NO. 2009-135
single -sided & 18 sets double-sided/stapled to City Clerk DUE no later than NOON Two (2)
Fridays prior to Council meeting date
• Agenda Draft review by Mayor, City Manager, Assistant City Attorney, City Clerk no later
than Tuesday morning One (1) week prior to Council meeting date
• Agenda Packets distributed to City Council and Agendas posted/distributed/mailed on
Thursday afternoon One (1) week prior to Council meeting date in compliance with Rohnert
Park Municipal Code Section 2.08.020 and related Resolution No. 2008-173
CITY OF ROUNERT PARK
COUNCIL AGENDA ITEM TRANSMITTAL REPORT
Meeting Date: December 18, 2009
Department: Finance
Submitted By: Sandy Lipitz, Director of Administrative Services
Submittal Date: December 16, 2009
Agenda Title: Fraud in the Workplace Policy
Requested Council Action: Adopt Policy
Summary:
As a part of last year's audit, the City's external auditors, Odenberg, Ullakko Muranishi & Co. LLP
recommended that, as a matter of "best practices", the City develop an anti -fraud policy which establishes
the ground rules that clarify that fraud will not be tolerated and spells out the consequences of fraud. The
auditors further suggested that this policy be acknowledged and signed by each employee/volunteer as
evidence that they understand the policy.
Staff has worked with the Assistant City Attorney to draft a Fraud in the Workplace Policy that outlines
acts that are considered fraudulent, the steps to be taken when fraud is suspected and the procedures to be
followed in accounting for missing funds, restitution and recoveries. Staff recommends that the City
Council adopt this policy prior to the end of the calendar year so that this accomplishment can be included
in the 2009 auditor's report.
Enclosures: Resolution; draft policy
CITY ATTORNEY'S REVIEW:
Relevant documents for this agenda item have been reviewed and approved as to form by the City Attorney.
CITY MANAGER'S RECOMMENDATION: ( ) Consent Item (X) Regular Time
(X) Approval ( ) Public Hearing Required
( ) Not Recommended ( ) Submitted with Comment
( ) Policy Determination by Council
( ) City Comments:
Per Interim City Manager's review and direction for distribution of this agenda item.
RESOLUTION NO. 2009-135
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROHNERT PARK
ADOPTING A FRAUD IN THE WORKPLACE POLICY
WHEREAS, the City's external auditor, Odenberg, Ullakko Muranishi & Co. LLP, has
recommended as a best practice that the City develop an anti -fraud policy, which defines acts of
fraud, establishes that fraud in the workplace will not be tolerated and outlines the consequences
of workplace fraud;
WHEREAS, the City's external auditors further recommended that this policy be
acknowledged and signed by each employee/volunteer as evidence that the employee/volunteer
has received and understands the policy; and
WHEREAS, staff has prepared a Fraud in the Workplace policy that outlines acts that
are considered fraudulent, the steps to be taken when fraud is suspected, and the procedures to be
followed in accounting for missing funds, restitution and recoveries.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Rohnert
Park adopts and directs City staff to implement the City of Rohnert Park Fraud in the Workplace
Policy attached as Exhibit "A."
DULY AND REGULARLY ADOPTED by the City Council of the City of Rohnert
Park this 18th day of December, 2009.
ATTEST:
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Clerk
CITY OF ROHNERT PARK
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BELFORTE: AYE BREEZE: AYE CALLINA A�=w ::&k'rRENZIE: ABSENT STAFFORD: AYE
AYES: (4) NOES: (0) ABSENT: (1) ABSTAIN: (0)
CITY OF ROHNERT PARK
ACKNOWLEDGEMENT OF RECEIPT OF POLICY
I acknowledge I
Workplace Policy
with this policy.
have received a copy of the City of Rohnert Park's Fraud in the
I acknowledge that I have read, understand, and agree to comply
EmployeeNolunteer's
Signature
EmployeeNolunteer's
Printed Name
Date
Please return this signed form to the Human Resources Dept. at City Hall. Thank you.
City of Rohnert Park
PERSONNEL PROCEDURES
Effective Date: December 18, 2009
Approved by: City Council Resolution No. 2009-135
Legal Review by: James J. Atencio, Assistant City Attorney
Subject: Fraud in the Workplace
L PURPOSE
To establish policy and procedures for clarifying acts that are considered to be
fraudulent, describing the steps to be taken when fraud or other related
dishonest activities are suspected, and providing procedures to follow in
accounting for missing funds, restitution and recoveries.
H. PERSONS AFFECTED
All City of Rohnert Park Employees (defined below)
IIL POLICY
A. STATEMENT
The City of Rohnert Park ("the City') is committed to protecting its assets
against the risk of loss or misuse. Accordingly, it is the policy of the City of
Rohnert Park to identify and promptly investigate any possibility of fraudulent
or related dishonest activities against the City and, when appropriate, to
pursue legal remedies available under the law.
B. SCOPE
This policy applies to any actual or suspected fraud, waste or abuse of
resources involving the City employees. Any investigative activity will be
conducted without regard to the suspected wrongdoer's length of service,
position/title or relationship to the City.
C. DEFINITIONS
1. Fraud — an act committed by one whom, by deceit, falsehood, or other
fraudulent means, defrauds the public or any person of any property,
money, or valuable security or any service. Fraud, as used herein,
and other similar irregularities, refer to, but are not limited to the
following:
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a. Claim for reimbursement of expenses that are not job-related or
authorized by the current Memorandum of Understanding.
b. Forgery or unauthorized alteration of documents (checks,
promissory notes, time sheets, independent contractor agreements,
purchase orders, budgets, etc.).
c. Misappropriation of City assets (funds, securities, supplies,
furniture, equipment, etc.).
d. Improprieties in the handling or reporting of money transactions.
e. Authorizing or receiving payment for goods not received or
services not performed.
f. Computer-related activity involving unauthorized alteration,
destruction, forgery, or manipulation of data or misappropriation of
City -owned software.
g. Misrepresentation of information on documents.
h. Any apparent violation of Federal, State, or local laws related to
dishonest activities or fraud.
i. Seeking or accepting anything of material value from those doing
business with the City including vendors, consultants, contractors,
lessees, applicants, and grantees. Materiality shall be determined
in accordance with the City's Conflict of Interest Code, which
incorporates Title 2 California Code of Regulations Section 10730,
adopted by the Fair Political Practices Commission.
2. Employee - any individual employed by the City of Rohnert Park,
either on full- or part-time status, whether or not compensated.
3. Management — any administrator, manager, director, supervisor, or
other individual who manages or supervises funds or other resources,
including human resources.
4. Internal Auditor — any person or persons assigned by the City
Manager to investigate any fraud or similar activity on a case by case
basis.
5. External Auditor — independent audit professionals who perform
annual audits of the City's financial statements.
6. Bad Faith Complaint — a complaint made with malicious intent.
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7. Retaliation — unlawful discrimination that occurs when an employee
is harassed or suffers an adverse employment action for assisting in
an investigation of unlawful or fraudulent employment practices.
Also referred to as unlawful retaliation or retaliatory harassment.
IV. PROCEDURES
A. REPORTING FRAUD IN THE WORKPLACE
Employees shall report all instances of suspected fraud. Employees may do
so by speaking with their direct supervisor. If the employee believes that the
supervisor may be involved in the fraud or similarly inappropriate activity, or
if there is any other reason the employee believes it would not be appropriate
to report to the supervisor, the employee shall make the report directly to the
next higher level of management and/or to the City Manager.
B. ANTI -RETALIATION STATEMENT
No employee shall retaliate against another employee who reports an incident
pursuant to this policy. Employees found to have violated this section may be
subject to disciplinary action, up to and including termination.
C. INTERNAL CONTROLS AND INVESTIGATIONS
Each department of the City is responsible for instituting and maintaining a
system of internal control to provide reasonable assurance for the prevention
and detection of fraud, misappropriations, and other irregularities in their
department. Management should be familiar with the types of improprieties
that might occur within their area of responsibility and be alert for any
indications of such conduct.
It is the City's intent to fully investigate any suspected acts of fraud,
misappropriation or other similar irregularity. An objective and impartial
investigation will be conducted regardless of the position, title, length of
service or relationship with the City of any party who is suspected of fraud.
An overview of the investigations process is as follows:
1. The Internal Auditor, in conjunction with the City Attorney, has the
primary responsibility for the investigation of all activity as defined in this
policy.
2. Throughout the investigation, the Internal Auditor will inform the City
Manager of pertinent investigative findings.
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3. Upon conclusion of the investigation, the results will be reported to the
City Manager.
4. The City Manager, following review of investigation results, will take
appropriate action regarding employee misconduct. If the investigation
substantiates that fraudulent activities have occurred, disciplinary action
may include termination in accordance with the City's Personnel Policies
and Procedures or Memorandum of Understanding (as applicable) and
referral of the case to the District Attorney's Office, or other appropriate
law enforcement agency for possible prosecution. Decision to prosecute
and/or refer any investigation results to the District Attorney's Office or
other appropriate law enforcement agency will be made in conjunction
with the City Attorney, as will final decision on disposition of the case.
5. The City may pursue every available legal remedy, including court-
ordered restitution, to recover City losses from the offender, or other
appropriate sources.
D. RIGHT TO RESPOND
A person under investigation for fraud is to be given notice in writing of
essential particulars of the allegations prior to the conclusion of the
investigation. Where notice is given, the person against whom allegations are
being made may submit a written explanation concerning such matters being
investigated to the Internal Auditor no later than seven calendar days after
notice is received. The Internal Auditor shall consider any written explanation
submitted hereunder as part of the investigation record. The Internal Auditor
may schedule interviews with a person under investigation for fraud as
necessary.
V. KEY RESPOPNISIBIL ii r'A EAS
A. Mayor, City Council, and Commissioner Responsibilities
1. If the Mayor, a City Council member, or a Commissioner has reason
to suspect that fraud has occurred, he or she shall immediately contact
the City Manager.
2. The Mayor, City Council member, or Commissioner shall not attempt
to investigate the suspected fraud or discuss the matter with anyone
other than the City Manager.
3. The alleged fraud or audit investigation shall not be discussed with the
media by any person other than through the City Manager in
consultation with the City Attorney and the Internal Auditor.
B. Management Responsibilities
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I. Management is responsible for being alert to and reporting to their
immediate supervisor any fraudulent or related dishonest activities in
their areas of responsibility.
2. Each manager should be familiar with the types of improprieties that
might occur in his or her area and be alert for any indication that
improper activity, misappropriation, or dishonest activity is or was in
existence in his or her area.
3. When an improper activity is detected or suspected, management
should determine whether an error or mistake has occurred or if there
may be dishonest or fraudulent activity.
4. If management determines a suspected activity may involve fraud or
related dishonest activity, they should contact their immediate
supervisor. Department Directors should inform the City Manager.
5. Management should not attempt to conduct individual investigations,
interviews, or interrogations. However, management is responsible for
taking appropriate corrective actions to ensure adequate controls exist
to prevent recurrence of improper actions.
6. Management shall support the City Manager's responsibilities and
cooperate fully with the Internal Auditor and other involved
departments, and law enforcement agencies in the deteeti01 , reporting,
and investigation of criminal acts, including the prosecution of
offenders.
7. Subject to applicable federal, state and local laws governing
confidentiality, management, in conjunction with the City Attorney's
office, shall provide access to all necessary records and personnel in
connection with any City investigation of fraudulent activities.
8. In dealing with suspected dishonest or fraudulent activities, great care
must be taken. Therefore, management should avoid the following:
a. Incorrect accusations.
b. Alerting suspected individuals that an investigation is
underway.
c. Treating employees unfairly.
d. Making statements that could lead to claims of false
accusations or other offenses.
9. In handling dishonest or fraudulent activities, management has the
responsibility to:
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a. Make no contact (unless requested) with the suspected
individual to determine facts or demand restitution. Under no
circumstances should there be any reference to "what you did",
"the crime", "the fraud", "the misappropriation", etc.
b. Avoid discussing the case, facts, suspicions, or allegations with
anyone outside the City, unless specifically directed to do so by
the City Attorney.
c. Avoid discussing the case with anyone inside the City other
than employees who have a need to know such as the City
Manager, Internal Auditor, City Attorney, or law enforcement
personnel.-
d.
ersonnel.
d. Direct all inquiries from the suspected individual, or his or her
representative, to the City Manager or City Attorney. All
inquiries by an attorney of the suspected individual should be
directed to the City Attorney. All inquiries from the media
should be directed to the City Manager.
e. Take appropriate corrective and disciplinary action, up to and
including dismissal, after consulting with the City Manager, in
accordance with the City's Personnel Policies and Procedures
or Memorandum of Understanding (as applicable).
C. Internal Auditor Responsibilities
1. Upon assignment by the City Manager, the Internal Auditor will
promptly investigate the fraud.
2. In all circumstances where the City Manager determines there to be
reasonable grounds for suspecting that a fraud has taken place, the City
Manager may direct the Internal Auditor, in consultation with the City
Attorney, to contact the Rohnert Park Public Safety Department.
3. The Internal Auditor may be authorized to receive relevant,
confidential information to the extent allowed by law, as determined
by the City Manager and the consultation with the City Attorney. The
Internal Auditor shall take all necessary steps to maintain the
confidentiality of such information.
4. If evidence gathered by the Internal Auditor substantiates a finding of
possible dishonest or fraudulent activities, the Internal Auditor will
proceed as follows:
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a. Discuss the finding with management and the Department
Director.
b. Advise management, if the case involves staff members, to
meet with the City Manager (or his/her designated
representative) to determine if disciplinary actions should
betaken.
c. If directed by the City Manager, report to the External
Auditor such activities in order to assess the effect of the
illegal activity on the City's financial statements.
d. If directed by the City Manager, coordinate with the City's
Risk Management regarding notification to insurers and
filing of insurance claims.
e. Take immediate action, in consultation with the City
Attorney, to prevent the theft, alteration, or destruction of
evidentiary records. Such action shall include, but is not
limited to:
i. Removing the records and placing them in a secure
location, or limiting access to the location where the
records currently exist.
ii. Preventing the iildly'dual suspected of committing
the fraud from having access to the records.
5. If the Internal Auditor is contacted by the media regarding an alleged
fraud or audit investigation, the Internal Auditor will consult with the
City Manager and the City Attorney, as appropriate, before responding
to a media request for information or interview.
6. At the conclusion of the investigation, the Internal Auditor will
document the results in a confidential memorandum report to the City
Manager and the City Attorney. If the report concludes that fraud has
occurred, the City Manager, in consultation with the City Attorney,
may authorize the report to be forwarded to the Rohnert Park Public
Safety Department.
7. The Internal Auditor will be required to make recommendations to the
appropriate department for assistance in the prevention of future
similar occurrences.
8. Upon completion of the investigation, including all legal and personnel
actions, all records, documents, and other evidentiary material,
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obtained from the department under investigation will be returned by
the Internal Auditor to that department.
D. Employee Responsibilities
1. A suspected fraudulent incident or practice observed by, or made
known to, an employee must be reported to the employee's supervisor
for reporting to the proper management official.
2. When the employee believes the supervisor may be involved in the
inappropriate activity, the employee shall make the report directly to
the next higher level of management and/or the City Manager.
3. The reporting employees shall refrain from further investigation of the
incident, confrontation with the alleged violator, or further discussion
of the incident with anyone, unless requested by the City Manager,
Internal Auditor, City Attorney or law enforcement personnel.
4. Any employee who makes a Bad Faith Complaint and/or any report
under this policy which the employee knows or has reason to believe is
false shall be subject to disciplinary action, including but not limited to
termination, as determined by the City Manager.
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