Managing Fraud Risk Managing Fraud Risk in in Higher Education Higher Education 2014 UNC Fall Controller's Workshop 2014 UNC Fall Controller's Workshop November 10, 2014 November 10, 2014 David A. King, CPA, CFE – Director, Special David A. King, CPA, CFE – Director, Special Investigations Investigations North Carolina Office of the State Auditor North Carolina Office of the State Auditor
35
Embed
Managing Fraud Risk in Higher Education 2014 UNC Fall Controller's Workshop November 10, 2014 David A. King, CPA, CFE – Director, Special Investigations.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Managing Fraud RiskManaging Fraud Riskin in
Higher EducationHigher Education
2014 UNC Fall Controller's Workshop2014 UNC Fall Controller's Workshop
November 10, 2014November 10, 2014
David A. King, CPA, CFE – Director, Special InvestigationsDavid A. King, CPA, CFE – Director, Special InvestigationsNorth Carolina Office of the State AuditorNorth Carolina Office of the State Auditor
Session ObjectiveSession Objective
Discuss challenges, trends, and strategies for managing fraud risk in higher education
Managing fraud risk requires awareness, tools, and proactive efforts, including collaboration with professional peers
Session OutlineSession Outline
The Tone at the TopExamination of University Fraud CasesCOSO Framework and the Audit CommitteeACFE Report to the NationsFinancial Aid Fraud Fraud Prevention and Mitigation
The Tone at the TopThe Tone at the Top
AICPA / ACFE Video: “The Tone at the Top” http://www.acfe.com/vid.aspx?id=4294974597
Steven Salbu
Georgia Institute of Technology – Atlanta, GA
Four Things Leaders Can Do to Four Things Leaders Can Do to Create An Ethical Climate within Create An Ethical Climate within
Their OrganizationTheir Organization
1.1. Lead with Lead with IntegrityIntegrity––By ExampleBy Example
2. 2. State Clearly and State Clearly and ConvincinglyConvincingly the the Organization’s Ethical Organization’s Ethical RequirementsRequirements and and ValuesValues
3. 3. Create a Path for Create a Path for ReportingReporting Misdeeds Misdeeds
(e.g., – a (e.g., – a WhistleblowerWhistleblower HotlineHotline))
4. 4. Reward (at least Reward (at least recognize) recognize) IntegrityIntegrity
Are you in a university leadership Are you in a university leadership role as a controller, accountant, role as a controller, accountant,
financial professional? financial professional?
What are you doing on your campus to promote an ethical
culture among your peers?
From the Headlines……..From the Headlines……..
Audit Uncovers Suspected Audit Uncovers Suspected Fraud at Georgia TechFraud at Georgia Tech
Former Georgia Tech Employee Former Georgia Tech Employee Indicted on Fraud ChargesIndicted on Fraud Charges
UC Berkeley Fires Administrator UC Berkeley Fires Administrator for Stealing Thousands to Pay for Stealing Thousands to Pay for Kids’ Tuitionfor Kids’ Tuition
UNIVERSITY OF FLORIDA UNIVERSITY OF FLORIDA NUCLEAR ENGINEERING NUCLEAR ENGINEERING PROFESSOR AND WIFE PROFESSOR AND WIFE
CONVICTED OF FEDERAL CONVICTED OF FEDERAL CONTRACT FRAUDCONTRACT FRAUD
Examination of Four University Examination of Four University Fraud CasesFraud Cases
Internal Control Deficiencies?Internal Control Deficiencies?
Circumvention of Internal Controls?Circumvention of Internal Controls?
Management Override of Internal Management Override of Internal Controls?Controls?
The Elements of FraudThe Elements of Fraud(The Fraud Triangle)(The Fraud Triangle)
RationalizationPressure / Need
Opportunity
The COSO Framework The COSO Framework
Control Environment Risk AssessmentControl ActivitiesInformation and CommunicationMonitoring Activities
The Updated COSO CubeThe Updated COSO Cube
The The
Control ActivitiesControl Activities
• Authorization of Transactions and Activities
• Segregation of Duties
• Use of Adequate Documents and Records
• Adequate Safeguards over Access to and Use of Assets and Records
• Independent Verification of Transactions
The COSO Framework and the Audit Committee
ACFE’s Report to the NationsACFE’s Report to the Nations
According to the 2014 ACFE’s Report to the Nations – tips were the most common means by which occupational fraud was detected
45% of the fraud cases in the ACFE study were initially detected through tips
15% of the fraud cases were detected
through management review
Initial Detection of Fraud SchemesInitial Detection of Fraud Schemes
Whistleblower HotlinesWhistleblower Hotlines(Federal – State – Universities)(Federal – State – Universities)
The State Auditor’s HotlineThe State Auditor’s Hotline
The State Auditor maintains a toll-free telephone number to report allegations of improper
governmental activities.
1-800-730-TIPS (8477)
Webpage link: www.ncauditor.net
Data Mining / Predictive Analytics Data Mining / Predictive Analytics / Benford’s Law / Benford’s Law
http://www.nigrini.com/
Financial Aid FraudFinancial Aid Fraud
Fraud Prevention and DetectionFraud Prevention and Detection
Verify the deliverable – payments should always require adequate supporting documentation
Know the people in your organizationPerform proactive auditsFocus on internal control Leverage technology – use data
mining / data analysis
Fraud Prevention and DetectionFraud Prevention and Detection
Internal Control / COSO Framework
Management Control
Employee Education and Training
The Role of Human Resources in Selecting and Screening Employees
Management Due Diligence in Selecting and Screening Employees
Establishing and Maintaining an Ethical Workplace
Managing Fraud Risk Requires Managing Fraud Risk Requires Effective Internal Controls Effective Internal Controls andand an an
Ethical CultureEthical Culture
ResourcesResources
http://antifraud.aicpa.org/
http://www.acfe.com/home.asp
http://www.coso.org/
http://www.acua.org/
http://www.theiia.org/
Contact InformationContact Information
David A. King, CPA, CFEDirector of Special Investigations