Contractual clauses
Summary
Develop contractual clauses to help prevent, detect and respond to fraud or non-compliance.
Why this countermeasure matters
A lack of clear contractual clauses can lead to:
- fraudsters deceiving others to take advantage of loose rules and unclear processes to commit fraud and avoid exposure or prosecution.
- poor management of fraud and corruption risks inability to take counter fraud actions.
How you might apply this countermeasure
Some ways to implement this countermeasure include:
- clauses that clearly set out requirements to report fraud
- clauses that clearly set out requirements to have counter fraud arrangements in place
- clauses that clearly define obligations and or permissions
- clauses that clearly set out liability for fraud
- clauses that allow access to premises and documents for quality assurance, compliance and investigation purposes
- clauses that obtain consent to collect and share information
- clauses that require directions to be followed the event of suspected fraud
- clauses that allow recovery of debts and fraud losses
- contracts that incentivise detecting and reporting fraud
- contracts that are easy to comply with.
How to check if your countermeasures are effective
Here are some ways to measure the effectiveness of this type of countermeasure:
- confirm contracts and policy exists
- confirm contracts and policy are available and easy to access
- confirm contracts and policy are clear and understood
- confirm activities concord with contract clauses and policy
- review contract clauses policy and confirm it concords with legislation
- confirm that staff can easily find and reference contracts and policy
- confirm that staff can easily understand and apply contracts and policy
- ask staff about any known vulnerabilities in the contracts, process and policy that may increase rates of non-compliance and fraud
- ask staff about any contracts or policies that limit their ability to collect, use and disclose information to prevent, detect and respond to fraud
- ask fraud control staff about any barriers to conducting fraud investigations, enforcing penalties and recovering fraud losses.
Related countermeasures
Establish governance, accountability and oversight of processes by using delegations and requiring committees and project boards to oversee critical decisions and risk. Good governance, accountability and oversight increases transparency and reduces the opportunity for fraud.
Develop clear instructions and guidance for activities and processes, such as instructions for collecting the right information to verify eligibility or entitlements, procedures to help staff apply consistent and correct processes and guidance to help staff make correct and ethical decisions.
Clearly document decision-makers using delegations, authorisations and instructions. Clearly defined decision-making powers increase transparency and reduce the opportunity for fraud and corruption.
Require clients, staff and third parties to have ongoing compliance, performance and contract reviews.
These are penalties for customers, staff or third parties that commit fraud or do not comply with rules, processes and expectations.
Related Fraudster Personas
This countermeasure helps prevent, detect or respond to the following Fraudster Personas:
