When

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When its a crock
Throwing culture out with the
rubbish Narelle George Queensland Crime and
Misconduct Commission Opinions expressed in
this presentation are those of the presenter and
do not necessarily represent the official
position or opinions of the Crime and Misconduct
Commission
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Culture
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Scrap
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Scrap its not just a load of rubbish.
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So what IS scrap?

• Consumable materials
• Offcut materials
• Surplus materials
• Waste products
• Recyclable metals
• Packaging / storage items
• Replacement materials
• Perishable items

• Obsolete items
• Unusable perfects
• Damaged or non-working items uneconomical to
  repair
• Seconds
• Low-value attractive items
• Assets diminished in value with use

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Why is it an issue?

• When an organisation has poor or inadequate
  controls that allow improper disposal practices,
  the situation can be exploited for more major
  corrupt activities.
• Employees can be confused or even misled by a
  lack of policy or procedures not realising that
  what theyre doing is technically criminal.

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Perceptions about scrap
The organisation does not appear to value or to
want the item, so its not really stealing.

• Theyre doing the organisation a favour
• Theyre doing their bit for the environment
• Theyre doing a good deed for the community

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Perceptions about scrap
Its OK to sell this stuff to mates, because the
proceeds go back into the social club for all of
us to share. Its only just this once its
not as if I was ripping off the system by making
a habit of it. Nobody at work will use it, so
itll only go to waste if I dont take it to use
at home. My supervisor let me take some
offcuts home last time, so he probably wont mind
if I just take this lot. I wont bother
asking the manager because shes too busy to
worry about small things like this. Everyone
else does it, so why shouldnt I? There arent
any rules about what to do with scrap, so I cant
be breaking any.
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Why be concerned?

• The impact of investigations
• Distress for those involved
• Associated costs

• High costs of improper disposal
• Higher activity costs incurred
• Lost opportunities to recoup residual value

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Why be concerned?

• A breeding ground for corruption
• Employees think they have a right to take scrap
• Unauthorised borrowing or lending of items
• Pilfering and larger scale theft of non-scrap
  items
• Fraudulent activity to support unauthorised scrap
  removal

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Cultivating a poor culture
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Risk area 1
Recognition of value

• Failure to recognise the value in scrap materials
• Failure to recognise that by-product materials
  have value in their own right
• Failure to recognise that used or surplus
  low-value assets retain value

Case Sleepers for beer Extracting his own
reward.
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Risk area 2
Clarity of policies and procedures

• A lack of clear policies on the disposal of
  low-value assets after their replacement
• A lack of clear policies during a transition
  period
• The promulgation of unclear policies and
  procedures

Case Rules for some The missing photocopier
.
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Risk area 3
Adequacy and effectiveness of internal controls

• Inadequate procedures, controls and storage
  arrangements
• Weaknesses in inventory controls over parts able
  to be refurbished for continued use
• Lack of security and vigilance over used assets
  and scrap that still retain some value

Case Sorting out required Heard at second
hand
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Risk area 4
Transparency and effectiveness of procurement
activities

• Ordering or purchasing supplies at quantities
  that exceed job needs
• Contracts with dealers for scrap disposal, which
  are ambiguous and/or not properly managed
• Corruption of procurement processes, which allows
  the removal of scrap for private purposes

Case Turfing out surplus
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Risk area 5
Accountability of management practices

• Ad hoc and unauthorised changes made to normal
  job procedures
• Misappropriation tolerated because Its always
  been past practice
• Lack of action on risks identified in audits

Case When practice isnt perfect When
management is diverted also
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Risk area 6
Integrity of management and staff attitudes

• Extra scrap generated when proceeds are seen as
  going to a good cause
• Lack of staff commitment to policies and
  procedures on the appropriate disposal of items
• Manipulation or circumvention of procedures by
  staff with corrupt intent

Case Sharing the proceeds / Write-off course
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Cultivating the cream discarding the whey
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What can be done?

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• Strong ethical leadership from the top of the
  organisation, which is upheld by all levels of
  management

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What can be done?

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• Clear frameworks for workplace behaviour and work
  practice standards, which are communicated to,
  and fully understood by all employees

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What can be done?

• 3
• Strategic planning to ensure the effective and
  economical management of the organisation, its
  activities, and its resources

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What can be done?

• 4
• Clear and unambiguous policies backed by
  practical and efficient work procedures to
  provide guidance for employees in carrying out
  their official duties

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What can be done?

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• An effective internal control structure and
  cost-effective internal controls to help prevent
  fraud and corruption

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The bottom line
The challenge for organisations is to make the
most efficient and effective use and control of
scrap and low value assets, to

• help reduce the number of preventable incidents
  and complaints
• reduce the associated costs and disruption for
  all concerned
• prevent opportunities for major corruption.

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and to cultivate a positive workplace culture.
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