Administrative Policies and Procedures Manual - Policy 7205: Dishonest or Fraudulent Activities
Date Originally Issued: 11-01-1991
The University must identify and promptly investigate any possibility of dishonest or fraudulent activities in the handling of University money, documents, and equipment involving students, faculty, staff, vendors, agencies, or unknown parties. All employees are responsible for reporting any possible dishonest or fraudulent activity.
An employee found to have committed a dishonest or fraudulent act in relation to the University's financial affairs is subject to disciplinary action by the University and investigation by law enforcement agencies when warranted. Described herein are the steps to be taken when fraud, misappropriation, and similar dishonest activities are suspected. This policy also includes the procedures to follow in accounting for any missing funds, restitutions, and recoveries.
- Dishonest or fraudulent activities include the following:
- Forgery or alteration of documents (checks, promissory notes, time sheets, independent contractor agreements, purchase orders, budgets, etc.).
- Misrepresentation of information on documents.
- Misappropriation of funds, securities, supplies, or any other asset (including furniture, fixtures, or equipment).
- Improprieties in the handling or reporting of money transactions.
- Authorizing or receiving payments for goods not received or services not performed.
- Authorizing or receiving payments for hours not worked.
- Any apparent violation of Federal, State, or local laws.
- Any similar or related activity.
3. Management Responsibility
Management is responsible for detecting dishonest or fraudulent activities in their areas of responsibility. Each manager should be familiar with the types of improprieties that might occur in his or her area and be alert for any indication that improper activities, misappropriation, or dishonest activity is or was in existence in his or her area. When an improper activity is detected or suspected, management should immediately contact the University Campus Police Department if they feel the situation warrants such action (for example, obvious theft has taken place, security is at risk, or immediate recovery is possible). In addition, management should immediately contact the University Internal Audit Department.
Management should not attempt to conduct individual investigations, interviews, or interrogations to determine if a suspected activity is improper. The Internal Audit Department will conduct an investigation of any suspected dishonest or fraudulent activity working with internal or external departments, such as the University Counsel's Office, University Division of Human Resources, and law enforcement agencies. However, management is responsible for taking appropriate corrective actions to ensure adequate controls exist to prevent continued occurrences of such improper activities.
Management will support the University's responsibilities and will cooperate with the Internal Audit Department and law enforcement agencies in the detection, reporting, and investigation of criminal acts, including prosecution of offenders. The Internal Audit Department's investigators are to have full and unrestricted access to all necessary records and personnel. All University furniture and contents, including desks, are open to inspection when there is a reasonable suspicion of a dishonest or fraudulent activity which makes such inspection appropriate; there is no assumption of privacy. Every effort should be made to effect recovery of University losses.
Great care must be taken in the dealing with suspected dishonest or fraudulent activities to avoid the following:
- Incorrect accusations.
- Alerting suspected individuals that an investigation is under way.
- Violating the employee's right to due process.
- Making statements that could lead to claims of false accusation or other offenses.
Responsibilities of the manager in handling dishonest or fraudulent activities include the following:
3.1. Do not contact the suspected individual to determine facts or demand restitution. Under no circumstances should there be any reference to "what you did," "the crime," "the fraud," "the forgery," "the misappropriation," etc.
3.2. Take appropriate disciplinary action after consulting with the Division of Human Resources.
3.3. Do not discuss the case, facts, suspicions, or allegations with anyone outside the University, unless specifically directed to do so by the University Counsel or the Internal Audit Department.
3.4. Do not discuss the case with anyone inside the University other than employees who have a "need to know," the Internal Audit Department, the University Counsel, and the Division of Human Resources.
3.5. Direct all inquiries from the suspected individual, his or her representative, or his or her attorney to the Internal Audit Department. Direct all inquiries from the media to the University Public Affairs Office. Proper response to such an inquiry should be, "I'm not at liberty to discuss this matter."
The Internal Audit Department will conduct an investigation of any situation involving possible impropriety in financial matters pertaining to the University. The Internal Audit Department will make inquiries to the extent necessary to determine whether the allegation has substance. Investigating, documenting, and reporting dishonest or fraudulent activities provide the following:
- A sound foundation for the protection of the innocent.
- The removal of wrong-doers from the University.
- Appropriate judicial action when warranted by the facts.
- Basis for risk management claims and civil litigation seeking recovery.
The Internal Audit Department is available and receptive to receiving relevant information on a confidential basis and should be contacted directly whenever a dishonest or fraudulent activity is suspected.
4.1. If warranted, an investigation will be conducted, this entails expeditious action and detailed analyses of available financial records. The audit investigation requires the full cooperation of the department's personnel. The Internal Audit Department will proceed as follows if evidence is uncovered showing possible dishonest or fraudulent activities.
4.1.1. The Internal Audit Department will advise management to meet with the Director of the Division of Human Resources to determine if any disciplinary action should be taken.
4.1.2. The Internal Audit Department will discuss findings with management and cognizant administrators.
4.1.3. The Internal Audit Department will notify the President, the cognizant vice president, and the University Counsel. The Internal Audit Department will also notify the Board of Regents if the investigation is of an area of high public interest or if the amount involved is greater than $5,000.
4.1.4. If illegal activity appears to have occurred, the findings will be reported to the appropriate audit and law enforcement agencies. This will be coordinated with University Counsel and University administrators.
4.1.5. The Internal Audit Department will notify the State Auditor immediately in writing if SA Rule No. 86-2 applies.
4.1.6. The Internal Audit Department will coordinate the notification of insurers and filing of claims with University Property Management.
5. Accounting for Loss, Restitution, and Recovery
The department incurring the loss from a dishonest or fraudulent act will suffer the loss until the monies can be recovered through insurance or restitution. The University Controller's Office will set up a receivable for the amount owed the University. Due to the uncertainty of collection, an allowance for doubtful accounts will be credited in an amount equal to the receivable. At fiscal year end, the allowance account will be adjusted by the amount collected and the department account will be credited accordingly.
6. Cost of Recovering Funds
There is no special fund to cover the costs of recovery, such as hiring special investigators or outside legal counsel. These expenses will be allocated from existing budgeted funds.