To provide an example of an association fraud policy, the NATIONAL ASSOCIATION OF REALTORS® is making available its fraud policy statement.
National Association of REALTORS® Fraud Policy Statement
This fraud policy is established to facilitate the development of controls that will aid in the detection and prevention of fraud against the National Association of Realtors (NAR, the Association). It is the intent of NAR to promote consistent organizational behavior by providing guidelines and assigning responsibility for the development of controls and conduct of investigations.
Scope of Policy
This policy applies to any irregularity, or suspected irregularity, involving employees as well as consultants, vendors, contractors, and/or any other parties with a business relationship with NAR.
Definition of Fraud and Fraudulent Activities
Fraud is defined as the intentional, false representation, or concealment of a material fact for the purpose of inducing another to act upon it to his or her injury.
A fraudulent act may be an illegal, unethical, improper, or dishonest activity, and may result in monetary losses for the Association. The following non-exhaustive list includes examples of the type of activities that would be considered fraudulent and in violation of this policy:
- Misappropriation or theft of funds, securities, supplies, or other assets.
- Impropriety in the handling or reporting of money or financial transactions.
- Profiting as a result of insider knowledge of NAR activities.
- Accepting or seeking anything of material value from contractors, vendors, or persons providing services/materials to NAR. Exception: Accepting gifts less than $50 in value.
- Disclosing confidential and proprietary information to outside parties.
- Disclosing to other person(s) securities activities engaged in or contemplated by NAR.
- Unauthorized destruction or unauthorized removal, or inappropriate use of records, furniture, fixtures, and equipment (including computers).
- Each member of the management team will be familiar with the types of improprieties that might occur within his or her area of responsibility, and be alert for any indication of irregularity. If there is any question as to whether an action constitutes fraud, contact the Senior Vice President of Human Resources for guidance. Any irregularity that is detected or suspected must be reported immediately to the Senior Vice President of Human Resources. As appropriate the Senior Vice President of Human Resources will contact the Comptroller and the General Counsel/Senior Vice President of Legal Affairs, and these department heads will determine how to proceed with investigations.
- The Internal Audit Department, under the guidance of the Comptroller and the General Counsel/Legal Affairs, has the primary responsibility for the investigation of suspected fraudulent activity as defined in the policy. Any investigative activity required will be conducted without regard to the suspected wrongdoer's length of service, position/title, or relationship to NAR. If the investigation substantiates that fraudulent activities have occurred, this Department will issue reports to appropriate designated personnel including, if appropriate, to the Board of Directors through the Finance Committee, with appropriate guidance and input from the CEO.
- Decisions to prosecute or refer the examination results to the appropriate law enforcement and/or regulatory agencies for independent investigation will be made by Legal Affairs, Human Resources and the CEO or his/her designee, as will final decisions on disposition of the case.
- All information received by the Internal Audit Department in the course of an investigation will be treated as confidential.
- Investigation results will not be disclosed or discussed with anyone other than those who have a legitimate need to know. This is important in order to avoid damaging the reputations of persons suspected but subsequently found innocent of wrongful conduct and to protect NAR from potential civil liability.
Authority of Investigators
- Members of the Internal Audit Department, under the guidance of the Comptroller, General Counsel/Legal Affairs and Human Resources, when within the scope of an investigation, will have:
- Unrestricted access to all NAR records and premises, whether owned or rented; and the authority to examine, copy, and/or remove all or any portion of the contents of files, desks, cabinets, and other storage facilities on the premises without prior knowledge or consent of any individual who might use or have custody of any such items or facilities.
- Great care must be taken in the investigation of suspected improprieties or irregularities so as to avoid mistaken accusations or alerting suspected individuals that an investigation is under way.
- Any employee who suspects dishonest or fraudulent activity should notify the Senior Vice President of Human Resources immediately. Employees should not attempt to personally conduct investigations or interviews/interrogations related to any suspected fraudulent act. An employee or other complainant may remain anonymous.
- All inquiries concerning the activity under investigation from the suspected individual, his or her attorney or representative, or any other inquirer should be directed to the Legal Department. No information concerning the status of an investigation will be given out. The proper response to any inquiry is, "I am not at liberty to discuss this matter." Under no circumstances should any reference be made to "the allegation," "the crime," "the fraud," "the forgery," "the misappropriation," or any other specific reference.
The reporting individual should be informed of the following:
- Do not contact the suspected individual in an effort to determine facts or demand restitution.
- Do not discuss the case, facts, suspicions, or allegations with anyone unless specifically asked to do so by the Legal Department.
- If an investigation results in a determination that an NAR employee has engaged in fraudulent activity, NAR reserves the right to take appropriate disciplinary action against the employee, up to and including termination. Any recommendation to terminate an employee will be handled in accordance with NAR’s employee policies and procedures. Should the Comptroller/Internal Audit Department disagree with the discipline imposed on an employee, the head of that Department shall first raise any concerns with Human Resources and may bring the matter to the attention of the CEO.
- The Comptroller is responsible for the administration, revision, interpretation, and application of this policy.