Friday, January 24, 2014

Stop that - 8 ways to deter fraud on campus

Since I just wrote about how to spot bad leadership behavior, this article from University Business Magazine seemed apropos: 8 Ways to Deter and Detect Campus Fraud. The article shares the unfortunate truth that fraud is no stranger to higher-ed, listing three examples where three higher-ed institutions reported six-figure losses to fraud. But fraud isn't inevitable. Higher-ed institutions with effective fraud prevention controls are already reducing the risks and consequences of fraud.

1. Know your enemy

Kevin Robinson, executive director of internal auditing at Auburn University in Alabama, says it's critical for everyone in higher education to understand that a perpetrator can be anyone, including your most recent employee of the month." That's why we "trust, but verify."
2. Know your role

"Every employee, throughout the university, plays a role in having a fraud-free environment," says Sharon Loiland, controller in the division of finance and operations at the University of North Dakota.
3. Set the top from the top

According to Terri Clark, director of fiscal affairs and CFO for the UND John D. Odegard School of Aerospace Sciences, "It’s critical that leadership doesn’t just talk about fraud prevention. They must also follow up by establishing controls and investigating reports of suspected fraud."
4. Find and fix vulnerabilities

Whenever you have a single person in charge of an entire process, from start to finish, that's an opportunity for misbehavior.
5. Formalize anti-fraud policies & processes

Allan Bachman, previously director of internal audit at a college in Boston (currently education manager for ACFE) advises that institutions should be direct. "State very clearly that if you are caught, you will be prosecuted."
6. Establish an anonymous reporting system

University Business reports that some institutions, such as Auburn and UND, use third-party providers for their hotline. Others, including Tennessee, leverage the state auditor’s office. Still others tap the free national crime reporting hotline, WeTip, which is available for anyone’s use.
7. Educate

An ACFE survey shows that in 81 percent of reported fraud cases, the perpetrator’s behavior exhibited red flags. Kevin Robinson at Auburn reminds "Your employees need to know those red flags to question them and report suspected problems."
8. Repeat

Even if you aren't familiar with your institution's policies, you can follow the general rule that if something doesn't "feel" right, it should be looked at. Is someone taking home retired equipment, and selling them online for personal profit? Is someone taking home old laptops for their kids to play with? While some private organizations might allow such behavior, these are not allowed in public institutions where state funds are used.

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