1. South Texas College Fraud Awareness and Fraud Surveys
Business Office
South Texas College Fraud Awareness and Fraud Surveys
“Count on Satisfaction”

2. Accounting Group Manager
Cynthia Villarreal
Accounting Group Manager

3. Purpose
Fraud
intentional deception to unlawfully deprive the College of something of value
Waste
extravagant, careless or needless expenditure of College funds, incurring of unnecessary expenses, mismanagement of college resources or property or the consumption of College property that results from deficient practices, systems, controls or decisions
Abuse
intentional, wrongful, or improper use or destruction of College resources; excessive or improper use of an employee or official’s position in a manner other than its rightful or legal use

4. 2016 Global Fraud Survey 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.

5. 2016 Global Fraud Survey

6. Three Major Types of Occupational Fraud
Asset Misappropriation – 83.5%
Theft or misuse of organization’s cash or assets
Most common (billing schemes) but lowest losses ($125,000-average)
Corruption – 35.4%
Off the books fraud that occur in the form of kickbacks, gifts, or gratuities to employees from contractors/vendors
Financial Statement Fraud – 9.6%
Deliberate misrepresentation of the financial condition of an organization through intentional misstatement or omission
Highest loss ($975,000-average)
Median Duration-18 months

7. Fraud Diamond Rationalization Pressure / Incentive
Justify crime to make it acceptable
Inappropriate values
Job/company dissatisfaction
Financial stress
Greed
Drug addiction
Meet work productivity targets
Capability (Criminal Mindset)
Opportunity
Personal traits
Character
Skills/abilities
Confidence/Ego
Effective lying
Immunity to stress
Weak internal controls
Weak / Remote Management
Abuse of one’s position

8. 2016 Global Fraud Survey
Behavioral Red Flags

9. 2016 Global Fraud Survey Detection Methods Active
Internal Audit – 16.5%
Management Review – 13.4%
Account Reconciliation – 5.5%
Document Examination – 3.8%
Surveillance/Monitoring – 1.9%
IT Controls – 1.3%
Active/Passive
Tip – 39.1% (employees-51.5%)
External Audit – 3.8%
Passive
Accident – 5.6%
Notified by Law Enforcement – 2.4%
Confession – 1.3%

10. Factors Contributing to Fraud
Lack of internal controls (segregation of duties)
Override of existing internal controls
Lack of management review (too much trust)
Poor tone at the top
No follow up, action or consequences for Non-Compliance
Lack of Policies

11. Examples of Acts of Fraud, Abuse and Other Improprieties
Theft or misappropriation of funds
Falsifying timecard with time not worked
False overtime
Sick Time abuse
Use of College property for personal benefits
Waste of supplies
Fictitious vendor, employee or student payments
Personal purchases on College credit cards

12. Examples of Acts of Fraud, Abuse and Other Improprieties
False reimbursements
Forgery or alteration of documents
Unauthorized use of records or access to information systems
Falsification of reports to management or external agencies
Authorizing or receiving compensation for goods not received or services not performed
Improper handling or reporting of financial transactions

13. Combating Fraud Tone at the Top – Code of Ethics
Internal Controls/Segregation of Duties
Management Review / Audits
Employee Trainings
Data Monitoring - 54% reduction in duration and total loss of fraud schemes
Visualize and explore data to profile, pattern, and detect outliers not associated with logic-checks
Build models to identify suspicious transactions and predict likelihood of fraud

14. South Texas College Guidelines for Reporting and Investigating Suspected or Known Fraud, Abuse and Other Improprieties

15. Introduction
STC is committed to creating an environment where fraud, waste, abuse and other improprieties are not tolerated
Responsibilities for educating employees
Responsibilities for internal controls
Responsibilities for identifying and evaluating risks

16. Employee Responsibilities
Report the act to:
Immediate supervisor (20.6%),
Next highest level of management (18%),
Director of Human Resources,
Anonymous Fraud and Ethics Hotline (39.5%), or
State Auditor’s Office Fraud, Waste and/or Abuse Hotline

17. Employee Responsibilities
Employee should prepare written report
Department where the act is occurring
What is occurring
When it occurred
Who is involved
How is it occurring
Employee will refrain from further examination of incident with anyone other than proper personnel

18. Employee Disciplinary Actions
An employee –
found to have participated
who hinders a fraud inquiry or investigation by making a false or misleading statement
who has knowledge of fraud of a dishonest act, but fails to report it according to these guidelines
Shall be subjected to disciplinary action

19. Doing What’s Right
If you don’t feel comfortable discussing the issue within normal channels, you may call The Network, an independent company which provides an anonymous reporting service for hundreds of companies worldwide.

20. Doing What’s Right
This service is not intended as a substitute for speaking directly with management.
It is an option that is always available if you want to help, but prefer not to give your name  

21. Doing What’s Right Anonymous Fraud & Ethics Hotline 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.

22. Fraud Survey

23. Questions