Guideline 3-21: Prevention of Fraud and Fraudulent Actions
The focus of this policy is theft; fraud; embezzlement; bribery and kickbacks; misappropriation, misapplication, destruction, removal, or concealment of property; and conflicts of interest. These practices or acts shall be referred to collectively as "fraud" or "fraudulent acts" within this policy. The word "suspected" as used in this policy indicates the presence of reasonable suspicion, based upon factual observations that such practices or acts are occurring or have occurred.
Examples of conduct subject to this policy include, but are not limited to, the following:
- Falsification of records and contracts
- Falsification of payroll records or requests for reimbursement
- Scholarship/financial aid misconduct
- Healthcare/insurance fraud
- Theft or removal of College property
- Use of College vehicles and other property for personal use
- Misapplying a thing of value to obtain a benefit or to harm another person
- Self-dealing (e.g., an employee transacts business with an entity in which the employee is an officer or agent)
- Misuse of College purchasing card
- Non-compliance with restrictions placed on certain accounts, funds, or grants
- Unauthorized purchases
- Requiring subordinates to perform personal tasks for the supervisor while on the College payroll
- Intentionally failing to follow College purchasing guidelines and restrictions to benefit a friend or family member
- The College shall annually notify all employees that it encourages employees to report specific instances of suspected fraud and that retaliation is prohibited against employees who report suspected fraud.
- Employees may report suspected fraud to their supervisors, to an individual with authority over the employee’s supervisor, to the College’s ethics hotline, to a campus president, to the College’s Internal Auditor, or to the Vice Chancellor of Fiscal Affairs. Under no circumstances shall an employee be required to make a fraud report to a person suspected of the fraud.
- Each person who receives a fraud report shall treat the information confidentially and shall share the information only with others in the administration or law enforcement who have a legitimate need to know. Confidentiality is necessary to prevent the destruction, removal, or alteration of evidence; to protect witnesses who have come forward from retaliation; and to minimize the risk of premature disclosure of information that may adversely impact individuals who may be erroneously accused of wrongdoing.
- If the Internal Auditor or Vice Chancellor of Fiscal Affairs receives an allegation of suspected fraud regarding the Chancellor or a Board member, the report shall be promptly shared with the Chairman of the Board of Trustees. If the Chairman of the Board of Trustees is the individual accused of suspected fraud, then the report shall be shared with the Vice Chairman of the Board of Trustees. The board or its designee shall take appropriate action to investigate the complaint. The board may employ an outside investigator or auditor in its discretion.
Examination and Investigation
All fraud reports shall be transmitted to the Internal Auditor through appropriate administrative channels unless the Internal Auditor is the subject of the report in which case the report shall be transmitted to the Vice Chancellor Fiscal Affairs.
The Internal Auditor in consultation with the Vice Chancellor of Fiscal Affairs shall review the report of suspected fraud and determine whether the incident shall be handled internally and administratively or whether an outside auditor, investigator, or other consultant shall be engaged to conduct the review. Audits shall be conducted in accordance with the Standards for the Professional Practice of Internal Auditing and the Institute of Internal Auditors Code of Ethics. The investigator, whether internal or external, shall promptly investigate each complaint, demonstrating appropriate urgency. Prompt investigation means that the investigation is commenced and completed as expeditiously as possible given the nature and complexity of the allegations.
The Internal Auditor and/or Vice Chancellor of Fiscal Affairs shall be permitted to engage experts in any field or area and to receive legal counsel as necessary to develop accurate and reliable evidence regarding the claim.
If the Internal Auditor and Vice Chancellor of Fiscal Affairs determine that temporary suspension or removal of an accused employee from a work site is necessary to preserve evidence, to protect witnesses, or to otherwise ensure the integrity of the investigation, then they shall consult with the Vice Chancellor of Human Resources.
The Internal Auditor (or other designated investigator) shall prepare a written report following completion of the examination. A written report shall be prepared regardless of whether the claim of fraud is substantiated or not. If a claim of fraud is substantiated, the Internal Auditor (or other designated investigator) will prepare a report for the Vice Chancellor of Fiscal Affairs, Chancellor and Chairman of the Board of Trustees describing the amount and type of loss, the means or method used to perpetrate the fraud, and recommendations to reduce or prevent additional losses. The Vice Chancellor of Fiscal Affairs will report the suspected fraud to local law enforcement as necessary or appropriate. The Internal Auditor will prepare a summary of all examinations for review by the Board.
General Considerations Regarding Financial Transactions and the Management of Resources
Each budget manager, along with his or his supervisor, is responsible for financial resource management in compliance with state or federal law, College policy and procedures, sound business practices, and funding restrictions.
The budget manager and supervisor must ensure that adequate separation of duties exists so that no single employee has sole authority over all facets of a transaction. Checks and balances are necessary to ensure proper oversight at each stage of a transaction or action involving payment or use of funds.
All revenue and expenditures must be timely and properly recorded and accounted for. All College employees who manage financial resources or are involved in financial transactions must be familiar with the policies and procedures regarding those transactions.
Various employees within the College will have authority and responsibility for spending College funds. All employees with such authority must take responsibility for understanding the policies and procedures applicable to purchasing, contracts, and vendor relations.
Unauthorized transactions and purchases shall be the personal financial responsibility of the individual committing the funds.
A College employee who exercises discretion in connection with contracts, purchases, payments, claims, or other pecuniary transactions of government commits an offense if he solicits, accepts, or agrees to accept any benefit from a person the public servant knows is interested in or likely to become interested in any contract, purchase, payment, claim, or transaction involving the exercise of his discretion. College employees may not accept from any current or prospective vendor or contractor any cash or negotiable instrument or any gift or benefit having a value greater than $50. However, items valued at less than $50 must not be accepted where there is the actual or perceived appearance of preferential treatment or conflict of interest. When in doubt about the permissibility of accepting a nominal gift, or when a concern exists that a vendor or contractor is offering improper gifts, employees may contact the Vice Chancellor of Fiscal Affairs.