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Home My WebLink About16 POLICY REGARDING THE REPORTING OF SUSPECTED FRAUDMEETING DATE: NOVEMBER 15, 2022 TO: MATTHEW S. WEST, CITY MANAGER FROM: JASON AL-IMAM, FINANCE DIRECTOR/CITY TREASURER SUBJECT: POLICY REGARDING THE REPORTING OF SUSPECTED FRAUD SUMMARY: The Government Finance Officers Association (GFOA) recommends that every government establish policies and procedures to encourage and facilitate the reporting of suspected fraud, waste or abuse. In order to demonstrate the City’s commitment to fiscal stewardship and accountability, a policy has been prepared for City Council consideration, which memorializes informal procedures currently in place governing the reporting of suspected fraud, waste or abuse. RECOMMENDATION: It is recommended that the City Council approve the Policy Regarding the Reporting of Suspected Fraud (the “Policy”), and authorize the City Attorney to make any necessary changes to the policy in order to implement and maintain the policy. CORRELATION TO THE STRATEGIC PLAN: The recommendation correlates to the strategic plan by implementing Goal C, explore the feasibility of establishing a fraud hotline. DISCUSSION: The Government Finance Officers Association (GFOA) recommends that every government establish policies and procedures to encourage and facilitate the reporting of suspected fraud, waste or abuse. Tips are the most common method for detecting fraud, with approximately 55% of tips provided by employees within the organization. In order to demonstrate the City’s commitment to fiscal stewardship and accountability, a policy has been prepared for City Council consideration, which memorializes informal procedures currently in place governing the reporting of suspected fraud, waste or abuse. The primary objective of this policy is to provide a means for employees to report activity or conduct in which instances of fraud, waste or abuse of City resources are suspected. For purposes of this policy, fraud, waste or abuse means any activity by a City employee that is undertaken in the Agenda Item _______ Reviewed: City Manager _______ Finance Director _______ AGENDA REPORT 16DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 Policy Regarding the Reporting of Suspected Fraud Page 2 of 2 performance of the employee's official duties, including activities deemed to be outside the scope of his or her employment, that is in violation of any local, state, or federal law or regulation relating to corruption, malfeasance, bribery, theft of government property, fraudulent claims, fraud, coercion, conversion, malicious prosecution, misuse of government property, or willful omission to perform duty, is economically wasteful, or involves gross misconduct. It is important to note that this policy does not apply to employment-related grievances or appeals, as existing City policy and procedures provide channels for resolution of these issues. Complaints will be reviewed by the Finance Director, Human Resources Director, City Manager and the City Attorney (unless one of them is the subject of the complaint). Appropriate action will be taken on all matters reported within the scope of this policy. _____________________________ Jason Al-Imam Finance Director/City Treasurer Attachment: Policy Regarding the Reporting of Suspected Fraud DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 1732736.1 City of Tustin POLICY REGARDING THE REPORTING OF SUSPECTED FRAUD Administered by the City Manager Effective Date: ______, 2022 DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 1732736.1 CITY OF TUSTIN POLICY REGARDING THE REPORTING OF SUSECTED FRAUD 1. PURPOSE It is critical that the City of Tustin (“City”) foster and maintain a workplace with a high legal and ethical standard of conduct in all activities and operate its business in a fair, effective, efficient, and transparent manner. Further, the City is committed to protecting its assets against the risk of loss or misuse by maintaining effective internal controls and by identifying and investigating any possibility of fraud, waste or abuse or other improper activities. This Policy establishes procedures, for City employees, to report suspected fraud, waste or abuse that has a financial impact on the City, and to assure that such reports will not result in retaliation by the City. 2. POLICY This Policy establishes a complaint procedure that City employees may use to report suspected fraud, waste or abuse that has a financial impact on the City. City employees are encouraged to report good faith suspicions of misconduct by City officials and/or City employees and any misuse of City property or resources. If you have knowledge of or suspect fraud, waste or abuse, follow the procedures for filing a complaint as outlined in Section 4 of this Policy. Any City employee who makes such a good faith report is protected against adverse employment actions by the City or any person acting on behalf of the City for raising such allegations and shall not suffer any reprisals or retaliation by the City or person acting on behalf of the City for making the report, whether or not the allegations are sustained. 3. PROHIBITED ACTIVITIES Persons should report information related to suspected fraud, waste or abuse that has a financial impact on the City. For purposes of this Policy, fraud, waste or abuse means any activity by a City employee that is undertaken in the performance of the employee's official duties, including activities deemed to be outside the scope of his or her employment, that is in violation of any local, state, or federal law or regulation relating to corruption, malfeasance, bribery, theft of government property, fraudulent claims, fraud, coercion, conversion, malicious prosecution, misuse of government property, or willful omission to perform duty, is economically wasteful, or involves gross misconduct. Prohibited activities shall include, but are not limited to: • Accepting a bribe, kickback, or illegal gratuity • Theft, misuse of, or misappropriation of City resources, property, information, assets or funds • Improprieties in the handling or reporting of financial transactions involving the City • Authorizing or receiving payment by the City for goods not received or services not performed • Computer-related activity involving unauthorized alteration, destruction of data, forgery, or manipulation of data or misappropriation of City-owned software DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 1732736.1 Please note this Policy does not apply to employment-related grievances or appeals, as existing City policy and procedures provide channels for resolution of these issues. 4. PROCEDURES FOR FILING A COMPLAINT WITH THE CITY CONCERNING SUSPECTED FRAUD, WASTE OR ABUSE A. When to Report When fraud, waste or abuse is suspected or detected, a complaint should be filed immediately under this Policy. B. How to Report City employees who have specific information that other City employees or contractors have engaged in fraud, waste or abuse are encouraged to report such information through the normal chain of command, which includes their immediate superior, department head, Finance Director, the City Manager, or the City Attorney. Face to face reporting through the chain of command is always the best form of communication, however, there may be certain circumstances where an employee wishes to remain anonymous. Recognizing that employees are not always comfortable going through the chain of command, individuals may report anonymous concerns by mail to: City of Tustin Attention: Anti-Fraud Program 300 Centennial Way, Tustin CA 92780. Reporting Parties are encouraged to provide as much specific information as possible, including names, dates, places, the events that took place, and the reason(s) why the incident(s) may constitute a violation or misconduct. Complaints concerning suspected fraud, waste or abuse will be shared with the Finance Director, Human Resources Director, City Manager and the City Attorney, unless one of them is the subject of the complaint. City officials who are not the subject of the complaint concerning suspected fraud, waste or abuse will investigate and will endeavor to protect the privacy and confidentiality of all parties involved, to the extent possible, consistent with the City’s obligations to conduct a thorough investigation, to comply with all applicable laws, to provide any accused individuals their legal rights, and/or to cooperate with law enforcement authorities. C. Compliance with State and Federal Laws This Policy is intended to describe the City’s policies and procedures for reporting prohibited activities and protecting Reporting Parties. This Policy is in addition to and does not supplant whistleblower protections and procedures provided under state and federal laws. 5. PROTECTION FROM RETALIATION A Reporting Party is defined under this Policy to be an employee of the City who, in good faith, reports suspected fraud, waste or abuse that has a financial impact on the City. Protections are DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 1732736.1 provided in two important areas: confidentiality of the report and protection against retaliation. The confidentiality of the Reporting Party will be maintained to the extent possible to investigate the report and to address the alleged violation. However, identity may have to be disclosed to conduct a thorough investigation, to comply with all applicable laws, to provide any accused individuals their legal rights of defense, and/or to cooperate with law enforcement authorities. No City officer, or employee, or any person acting on behalf of the City, shall influence, restrain, or prevent any employee from disclosing information that the employee has reasonable cause to believe relates to or is evidence of fraud, waste or abuse. Any employee acting in good faith and upon a reasonable belief as a Reporting Party that misconduct has occurred, or who believes the City has disclosed or may disclose such information will be protected from threats or retaliation, including, but not limited to, discharge, demotion, suspension, harassment, reduced compensation, changes in the terms and conditions of employment, or other forms of discrimination. Additionally, no employee may be adversely affected because the employee refused to carry out a directive that would result in a violation of state or feder al statute or a violation of or noncompliance with local, state, or federal rule or regulation. Protection from retaliation also includes the following circumstances: • When a complaint concerning suspected fraud, waste or abuse is filed against a person who has authority over the Reporting Party or filed against a person who has authority to investigate, discover or correct the alleged violation or noncompliance. • When a Reporting Party provides information to or testifies before any public body which is investigating, hearing, or inquiring into an employer’s violation of or noncompliance with local, state, or federal rules or regulations. • When a Reporting Party reports a reasonable belief of a violation of a municipal ordinance. This Policy does not prohibit the City from taking adverse action for legitimate, nondiscriminatory reasons that are unrelated to the complaint concerning suspected fraud, waste or abuse. Such legitimate or non-discriminatory actions may include discipline for cause or refusing to hire, promote, transfer, or take any other legitimate personnel action based on inadequate qualifications or poor performance reviews. Any employee who knowingly files a false complaint, as opposed to a complaint which, even if erroneous, is made in good faith, may be the subject of appropriate disciplinary action, up to and including termination. _____________________________ Matthew S. West City Manager _____________________________ Jason Al-Imam Director of Finance _____________________________ Erica N. Yasuda City Clerk DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113 1732736.1 DocuSign Envelope ID: C0724345-4C2B-4482-814E-A77CB7874113