five steps to countering fraud in academies

21-08-2014

By Rachael Tiffen, Head of Counter Fraud, CIPFA

Over the past few years, I have listened to colleagues in the counter fraud field talk about fraud in schools and academies. As a former Head of Audit, I am aware of the common risks for educational establishments and the limited resources they have to tackle fraud once it is in the system.

Many establishments do not have enough staff (or skills) to launch investigations or offer the full range of segregation of duties. However, putting in place some baseline prevention techniques could prevent a fraud and deter those that may take advantage of opportunities.

Fraud risks are similar across the public sector with a few exceptions. Academies are just as vulnerable to fraud and bribery and corruption as other parts of the public sector. Fighting Fraud Locally (FFL) is the national local government strategy and is overseen by a board of independent experts from the local government field. FFL produces free guidance and tools for those connected with local government. The strategy is hosted and led by CIPFA.

CIPFA has published detailed guidance in partnership with Mazars to help schools and academies prevent fraud and spot the warning signs early.

There is plenty of guidance available, and our resilience tool can help you assess your controls. We would be happy to hear your experiences and case studies. However my top tips to lookout for are as follows: 

1. Know who you are employing

Employing someone who does not have the qualification can lead to both reputational and financial damage. Look out for original documents, proper references on headed paper and check what you are given.

  • Check qualifications and references, check employment history.

2. Ensure you have the right governance in place to prevent fraud

Make sure you have written processes in place, staff are trained and understand responsibilities. Put in place checks where finance and payments are involved.

  • Spot checks and segregation on duties on pay awards, payroll, claims, and expenses 

3. Sensible procurement

Letting contracts, ordering supplies and payments opens the door to opportunities for fraud and corruption if proper procedures are not in place.

  • check you have governance in place
  • make sure you have declarations of interest, hospitality books and that these are checked
  • are contracts split and who is awarding them and what processes are they using?
  • check leasing agreements are necessary and genuine
  • watch out for photocopier leasing details, this is a common problem.

4. Financial management

Put in place governance over financial agreements, cheque books, income from leasing halls or rooms and what funds are spent on.

  • make sure there are checks on payments
  • ensure revenue streams are monitored
  • watch out for false invoices.

5. Mandate fraud  

Make sure if a supplier asks for his bank details to be changed that this is correct and the genuine supplier.

Finally, make sure you have a procedure for staff and governors to report concerns through and that there is an independent route. Publicise the reporting route - and make sure you give staff and governors some basic fraud awareness training.

Rachael Tiffen, Head of CIPFA Counter Fraud Centre | LinkedIn Profile

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Rachael heads up the UK’s first centre of excellence for counter fraud professionals delivering services, products and supporting others through best practice, run by CIPFA. Rachael has over 20 years’ experience in local government, heading up audit and fraud investigations teams at Islington, Lambeth, Waltham Forest and Enfield. She has been Chair of the London Counter Fraud Partnership since 2005 and was instrumental in founding the CIPFA Better Governance Forum. She was appointed Chair of the CIPFA Fraud Advisory Panel in 2007 and as part of this group she co-wrote the three CIPFA Red Books Managing the Risk of Fraud. Rachael worked at the National Fraud Authority 2010-2013 as Head of Public Sector Fraud and was responsible for drafting and leading on Fighting Fraud Locally – the local government counter fraud strategy. During 2013-2014, Rachael managed the Ministry of Defence’s Counter Fraud Service.