Managing the Risk of Fraud in Higher Education Robin Woods Stacey M. Walker Internal Audit Director Internal Audit Director Texas A&M System Auburn University
Topics What is fraud? Where does fraud occur? What are the red flags of fraud? What are the characteristics of a fraudster? What can I do to help prevent fraud?
Fraud Occupational Fraud A willful or deliberate act or failure to act with the intention of obtaining an unauthorized benefit such as money or property, by deception or other unethical means. Occupational Fraud The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.
Examples of Fraud Use of purchasing card for personal use False/duplicate travel claims Misuse of university property or resources Theft of funds or property Fictitious (ghost) employees Conflict of Interest
Where does fraud occur? Source: 2016 Report to the Nations on Occupational Fraud and Abuse, Association of Certified Fraud Examiners
How is fraud discovered? Source: 2016 Report to the Nations on Occupational Fraud and Abuse, Association of Certified Fraud Examiners
Why Do People Commit Fraud? The Fraud Triangle Source: Yellowbook-cpe.com
Red Flags of Fraud Behavioral Organizational Document Living beyond your means Financial issues Close relationship with vendors Not willing to share duties No vacations or time away from office Organizational Poor “tone at the top” High turnover Lack of documented policies and procedures Document Missing documents Altered documents Unusual billing addresses Employee and vendor addresses match
Characteristics of a Fraudster Gender: _______ Age: _________________ Length of Time with Victim Organization: ______________ Degree Level: _______________ Criminal Background: ___________ Employment Background: _____________________ Source: 2016 Report to the Nations on Occupational Fraud and Abuse, Association of Certified Fraud Examiners
What Can You Do? Set good “Tone at the Top” Increase perception of detection - Regular reviews (both internal and external) Create good segregation of duties – no one should have total control of a process Training What are internal controls? Who is responsible? If you see something, say something! Make sure employees know how/where to report
Questions?