11/12/2019 Fraud Prevention/ Student Activity Account Best Practices November 6, 2019 Ag e nda F ra ud Pre ve ntion Stude nt Ac tivitie s Cre dit Ca rds 2 3 1
11/12/2019 Cr e sse y’s F r aud T r iangle Ne e d F r aud T r iangle Oppor tunity Rationalize 4 War ning Signs - Be havior al Annoye d by re asonable que stions R e fuse time - off Provide s / promotions unre asonable re sponse s Wa rning Sig ns / Re d F la g s Bragging on E xc e ssive purc hase s / borrowing from life style c o- worke rs Nonre sponsive & de laying tac tic s 5 War ning Signs - Ge ne r al We ak inte r nal c ontr ols T hings not Unsuppor te d making tr ansac tions busine ss or / jour nal c ommon e ntr ie s / Warning se nse adjustme nts Sig ns / Re d F lags Une xpe c te d Photoc opie d ove r dr afts / or missing de c line s in doc ume nts c ash balanc e s 6 2
11/12/2019 Ge ne ra lly Most Hig h- Risk Are a s Cash Cre dit Cards •E a sie st to •E a sy to g ra b use , e a sy to a b use •So me time s po o r •Co ntro ls, c o ntro ls Co ntro ls, Co ntro ls! 7 F ra ud Sc he me s Payroll • E mplo ye e fra udule ntly g e ne ra te s o ve rc o mpe nsa tio n o n his/ he r b e ha lf. • Mo st c o mmo n pa yro ll fra uds: • Gho st e mplo ye e ; F a lsifie d ho urs a nd sa la ry Che c k T ampe ring • E mplo ye e pre pa re s a fra udule nt c he c k fo r his/ he r o wn b e ne fit; o r • E mplo ye e inte rc e pts a c he c k inte nde d fo r a third-pa rty a nd c o nve rts the c he c k E xpe nse Re imburse me nt • Misc ha ra c te rize d e xpe nse re imb urse me nts; • Ove rsta te d e xpe nse re imb urse me nts; • F ic titio us e xpe nse re imb urse me nts; • Multiple re imb urse me nts 8 F ra ud Sc he me s (c ont’d) Cash Re giste r • Common at Sc hools •In pra c tic e , e mplo ye e re mo ve s c a sh fro m re g iste r, the n •E nte rs re fund o r vo ids sa le to c o ve r up the ft. Billing • Most c ommon and c ostly disbur se me nt fr aud. •F ra udste r pro vide s fa lse suppo rt; •Invo ic e s, purc ha se o rde rs, purc ha se re quisitio ns, re c e iving re po rts, e tc . •Distric t issue s c he c k b a se d o n fa lse info rma tio n •Purpo se fo r mo st b illing sc he me s is to g e ne ra te c a sh o r g o o ds fo r sa le •Ca use Distric t to b uy g o o ds o r se rvic e s tha t a re : •No ne xiste nt; •Ove rpric e d; •No t ne e de d b y the Distric t. 9 3
11/12/2019 F ra ud Pre ve ntion 1. F ra ud Pre ve ntio n Pro g ram F ra ud Pre ve ntion 3. 2. Attitude T e c hniq ue s 10 F r a ud Pr e ve ntion: 1. F r aud Pr e ve ntion Pr ogr am Appropria te On-g oing Risk Writte n Inte rna l E thic a l Asse ssme nt Polic ie s & Controls T ra ining Prog ra m Proc e dure s Se g re g a tion of F air & Audit Dutie s a nd Ba la nc e d Committe e Re c onc ilia tion Disc ipline 11 F r a ud Pr e ve ntion: 1. F ra ud Pre ve ntion Prog ra m, c ont. Do you ha ve a n a udit c ommitte e ? Do the y pass o n tips Do e s it rare ly me e t? re c e ive d? Do you ha ve inte rna l c ontrols? Are the y e nfo rc e d? Do you ha ve a n e thic s polic y? Is it c o mmunic a te d? 12 4
11/12/2019 F r aud Pr e ve ntion: 2. Attitude T he Importa nc e = = T rust but Attitude of E xe rc ising Ve rify! Profe ssiona l SKE PT ICISM 13 F ra ud Pre ve ntion: 3. T e c hnique s Se g re g a tion of Dutie s •Dispe rse c ritic a l func tio ns o f a pro c e ss to mo re tha n o ne pe rso n o r de pa rtme nt •In g e ne ra l, the a ppro val func tio n, the a c c o unting / re c o nc iling func tio n, a nd the a sse t c usto dy func tio n sho uld b e se pa ra te d a mo ng e mplo ye e s •Co nside r se pa ra ting : c a sh re c ’ s, c a sh c o unts, b a nk de p’ s, re c o n’ s, po sting de p’ s •Whe n no t fe a sible , a de ta ile d supe rviso ry re vie w o f re la te d a c tivitie s is re q uire d Re c onc ilia tion •Che c ks & Ba la nc e s •F o r e xample , mo nth-e nd re c o nc iliatio ns c o mpa ring le dg e rs to b a nk sta te me nts •T hink a b o ut yo ur o wn c he c kb o o k - c o mpa ring b a nk sta te me nts with re g iste r Ove rsig ht •Asking the rig ht q ue stio ns o f e mplo ye e s (inc luding fisc a l e mplo ye e s) •If yo u do n’ t kno w/ unde rsta nd, a sk •If no thing e lse , yo u will g a in a b e tte r unde rsta nding o f yo ur Distric ts func tio ns 14 Stude nt Ac tivitie s 15 5
11/12/2019 Stude nt Ac tivitie s - Age nda Authority Administr ation Polic y De ve lopme nt • Ge ne ral Stude nt and Distric t Manag e d Ac tivitie s • F und Raising Po lic ie s • Purc ha sing Po lic ie s • Do rmant F unds Ma na g e me nt of Stude nt Ac tivity Prog ra ms • Stude nt Manag e d Stude nt Ac tivity Pro g rams • Distric t Manag e d Stude nt Ac tivity Pro g rams 16 Stude nt Ac tivitie s - Author ity ORC § 3315.062 pe r mits a boar d of e duc ation to e xpe nd funds for stude nt ac tivity pr ogr ams. T his se c tions state s: • T he Bo ard o f E duc atio n o f any sc ho o l distric t may e xpe nd mo nie s fro m its g e ne ral re ve nue fund fo r the o pe ratio n o f suc h stude nt ac tivity pro g rams inc lude d in the pro g ram o f e ac h sc ho o l distric t as autho rize d by the its bo ard o f e duc atio n. Suc h e xpe nditure s sha ll no t e xc e e d five -te nths o f o ne pe rc e nt o f the bo ard’ s annual o pe rating budg e t. 17 Stude nt Ac tivitie s - Author ity ORC § 3315.062 furthe r sta te s: •I f mo re tha n $50 a ye a r is re c e ive d thro ug h a stude nt a c tivity pro gra m, the mo nie s fro m suc h a pro g ra m sha ll b e pa id into a n a c tivity fund e sta blishe d by the bo a rd o f e duc a tio n. • T he Bo ard o f E duc atio n shall a do pt re g ula tio ns g o ve rning the e sta b lishme nt a nd ma inte na nc e o f suc h fund, inc luding a syste m o f a c c o unting to se pa ra te a nd ve rify suc h tra nsa c tio ns a nd to sho w the so urc e fro m whic h the fund re ve nue is re c e ive d, the amo unt c o lle c te d fro m e a c h so urc e , a nd the a mo unt e xpe nde d fo r e a c h so urc e . E xpe nditure s fro m the fund shall b e subje c t to the appro val o f the bo ard. 18 6
11/12/2019 Stude nt Ac tivitie s - Administr ation Boar d of E duc ation •Ado pt, b y re so lutio n in o ffic ia l b o a rd minute s, rule s, re g ula tio ns, a nd po lic ie s to g o ve rn the e sta b lishme nt and o pe ratio ns o f stude nt ac tivity funds (F unds 200 a nd 300), a utho riza tio n o f re la te d o rg a niza tio ns, a s we ll a s the pa rtic ipa tio n o f stude nts and sc ho o l distric t e mplo ye e s in fund ra ising pro g ra ms o f the se re la te d o rg a niza tio ns. 19 Stude nt Ac tivitie s - Administr ation T r e asur e r •Re spo nsible fo r e nfo rc e me nt o f ac c o unting pro c e dure s a nd inte rna l c o ntro l pro c e dure s • Custo dian o f all funds (ORC 3313.51) • Ma y de le g a te a n e mplo ye e to re c e ive c usto dy o f stude nt a c tivity funds. • T he c usto dia n must de po sit mo nie s, with the tre a sure r o r pro pe rly de sig na te d de po sito ry, in a c c o rda nc e with distric t po lic ie s a nd ORC § 9.38. 20 Stude nt Ac tivitie s - Administr ation Supe r inte nde nt •Re spo nsible fo r administrating all bo ard po lic ie s, e xc e pt tho se re quire d o f the tre asure r 21 7
11/12/2019 Stude nt Ac tivitie s - Administr ation Pr inc ipa l •Princ ipal o r autho rize d administrato r is re spo nsible fo r the appro val o f re quisitio ns fo r the e xpe nditure o f funds a nd a ny o the r dutie s a s a ssig ne d by the supe rinte nde nt o f the sc ho o l distric t. 22 Stude nt Ac tivitie s - Administr ation Advisor •Pre pa re a nnua l budg e ts and purpo se c lause s o f the ac tivity g ro up •Supe rvise the ac tivitie s o f the g ro up, inc luding pre paratio n o f fund raising po te ntials, pro o fs o f c ash, and o the r appro priate do c ume ntatio n •Any o the r dutie s as assig ne d by the pro pe r administrative autho rity 23 Stude nt Ac tivitie s – Polic y De ve lopme nt Ge ne r al Stude nt and Distr ic t Manage d Polic ie s • F o rmula te an o ve ra ll po lic y sta te me nt whic h g o ve rns the ma nag e me nt a nd c o ntro l o f all stude nt manag e d stude nt a c tivity pro g ra ms. • F o rmula te an o ve ra ll po lic y sta te me nt whic h g o ve rns the ma nag e me nt a nd c o ntro l o f all distric t ma na g e d stude nt a c tivity pro g ra ms. • Guide line s fo r e a c h a re inc lude d in a ma nua l o n the AOSinte rne t pa g e . 24 8
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