Institutions such as the University do not lend themselves to out-of-the-box fraud prevention strategies. In fact, I suspect that many individuals within the University community would find it difficult to conceptualize how a potential fraud could impact them.
People are aware of fraud – we need only read the newspapers to remind us. However, fraud is too abstract to us unless we deal with cash, assets or other tangibles. This disconnect creates an environment where prevention and awareness become urgent, starting with the tone of zero tolerance.
Zero Tolerance and Setting the Tone
Sound administration is not antithetical to academic freedoms, staff autonomy or trust between co-workers. On the contrary, it is the professionalism and reasoned judgment inherent in an academic community that provides rigour to fraud prevention.
Fostering an environment that deters potential fraudsters requires that we set the appropriate tone in our departments. Ethics and accountability are paramount, and it must be clear that fraud will not be tolerated by anyone at any level of the University.
Think It Can’t Affect You? Wrong
The University is not immune to fraud, not even to serious fraud, and not all fraud involves cash or assets.
Consider these examples:
• A student alters his or her GPA in your course by overriding system controls
• A researcher includes misleading information in a grant application and thereby secures the grant you had applied for
• A co-worker falsifies a time sheet and therefore gets paid more than you
These are all examples of fraud that could affect members of the University, and none of them involves a cash register.
Internal Audit’s Role
Last year the former internal auditor conducted an extensive fraud investigation to help the University recuperate losses and ensure the quality and sufficiency of evidence for criminal proceedings. But fraud investigation is a minor part of internal audit’s role at the University.
The auditor also devoted time to providing the U of L community with information and presentations on fraud prevention. This is a first-rate example of how internal audit can provide value by supporting those individuals who are closest to the risks in addition to investigating after the fact.
Can I Leave It to Internal Audit?
No. As I mentioned earlier, fraud prevention begins by setting the proper tone among faculty and staff. To help prevent fraud we must lead as examples of compliance. When something looks odd or inappropriate, we cannot assume that someone else will look into it. Forty per cent of fraud is uncovered through a tip, and only 18 per cent is identified through internal controls.* Reporting fraud in good faith is a duty, not an option.
The University has a safe disclosures policy, and under this policy you are not only protected from reproach for reporting, but you may face reprisal if you fail to report. Please take the time to read this policy as well as the University’s fraud policy.
Sonya Harris is the University’s internal auditor. If you have questions, call her at 403-382-7132 or e-mail her at firstname.lastname@example.org.
* Source: 2004 Report to the Nation on Occupational Fraud and Abuse, Association of Certified Fraud Examiners
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