South Texas College Fraud Awareness and Internal Controls Business Office South Texas College Fraud Awareness and Internal Controls

Guidelines for Reporting and Investigating South Texas College Guidelines for Reporting and Investigating Suspected or Known Fraud, Abuse and Other Improprieties http://hr.southtexascollege.edu/forms/policies/policies_reporting_fraud_procedures.pdf

Examples of Acts of Fraud, Abuse and Other Improprieties ACFE – The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets Encompasses wide variety of conduct, such as pilferage to sophisticated investment swindles Common violations – asset misappropriation, corruption, false statements, false overtime, petty theft and pilferage, use of common property for personal benefits and payroll and sick time abuses

2. Employee Responsibilities Report the act to your immediate supervisor If the supervisor has participated in or condoned the act, report the matter to the next highest level of supervisor or management Director of Human Resources Anonymous Fraud Hotline State Auditor’s Hotline

3. Anonymous Fraud Hotline THE NETWORK 1-800-482-5158 This toll-free number is staffed by The Network, an independent organization operating 24 hours a day, 7 days a week. You do not have to give your name. An Interview Specialist documents your concern, assigns you a personal reference number, and relays your concerns to the company.

Fraud Survey http://finance.southtexascollege.edu/businessoffice/survey.html

Got Internal Controls?

The COSO* Definition of Internal Control Definition of I/C: “Internal control is a process, effected by an entity’s board of directors, management, and other personnel - designed to provide reasonable assurance regarding the achievement of objectives in the following categories: a) reliability of financial reporting b) effectiveness and efficiency of operations, c) compliance with applicable laws and regulations. * Committee of Sponsoring Organizations of the Treadway Commission

Why Internal Controls are Important? Provides management with confidence that the entity is operating according to specific standards which are monitored-someone is watching. Indicates to staff that what they are doing is important and that QUALITY is important. Sends a signal that certain behaviors will not be tolerated.

Benefits of Strong Internal Controls Reducing and preventing errors in a cost- effective manner. Ensuring priority issues are identified and addressed. Protecting employees & resources. Providing appropriate checks and balances. Having more efficient audits, resulting in shorter timelines, less testing, and fewer demands on staff.

Why controls don’t always work Inadequate knowledge of policies or governing regulations. Inadequate segregations of duties. Inappropriate access to assets. Form over substance. Control override. Inherent limitations.

What is Fraud Did something bad/wrong – misrepresentation of facts Fraud Typically requires 3 elements Did something bad/wrong – misrepresentation of facts Done intentionally Resulted in unauthorized personal gain

Fraud Diamond - Explains why fraud is committed Incentive Opportunity Inadequate internal controls Weak / Remote Management Personal Debts Greed Drug Abuse Organized Crime Inappropriate values Job/company dissatisfaction Knowledge of systems Skills required to undertake Rationalization Capability

What you can do! When thinking about internal controls, consider the following: Propriety of transactions Reliability and integrity of information Compliance with policies and government regulations Safeguarding assets

What you can do! Economy and efficiency of operations…is there a better way to do the job? Make sure you have up-to-date policies and procedures; Ensure authorization limits are communicated within your department; Ensure all assets (especially cash) are safeguarded at all times; Establish document control (especially for spreadsheets); Ensure approval signatures are visible (legible) on all required documentation; Make sure data is only accessible by authorized personnel; Understand your department/function’s risks; Establish objectives and measures for your department/function and for major programs; and Track performance to evaluate your success!

Ethics

Manual of Policy Policy 4000, Code of Ethics Policy Statement Policy 4001, Code of Professional Ethics for the Administration, Faculty and Staff Policy 4901, Standards of Conduct Policy 4204, Reporting Suspected or Known Fraud, Abuse and Other Improprieties

Thank You