Fraud Prevention Tips

There are certain warning signs that we should be aware of.

“Red Flags” of Fraud

• Unexplained variances

• Documentation is not original

• Lack of reconciliations

• “Rush” requests

• Complaints

• Employee does not take vacation time

• Voluntary overtime

• One employee “does it all”

• Marked personality changes in an employee

• Employee living beyond his/her means

 

What can you do to prevent fraud at Lone Star College System?

• Simply by paying attention. Just recently, a District employee noticed something odd while performing a monthly bank reconciliation and as a result of raising a question about it, we were able to interrupt a fraud in process. If it looks funny to you, take the time to find out if there is a problem. If you find something that concerns you, please discuss it with your supervisor or, if you feel you need to, with Internal Audit or District Police.

• If anyone ever asks you to do something you know is wrong, particularly if they offer you a benefit related to that action, report it immediately to your supervisor, another person in authority, District Police, or Internal Audit. Do not risk your reputation and your job by even appearing to comply.

• Report suspected frauds. If you have reason to believe that something fraudulent is happening at the District, talk to your supervisor about it. If that is not a viable option please contact Diane Novak, Director, Internal Audit, at 832-813-6544 (diane.novak@lonestar.edu) or District Police.

Thank you for doing your part to prevent fraud at Lone Star College System.

 

Not everything that looks suspicious is a fraud, but almost all frauds look suspicious.

 

More Information About Fraud........

Most employees who commit fraud are not criminals. They are trusted employees who may have never even thought about stealing from their employer. However, due to circumstances in their lives and opportunities at work, they can succumb to temptation.

 

Almost all frauds consist of three elements (Fraud Triangle):

Opportunity

Pressure

Rationalization

 

Opportunity is generally provided through weaknesses in the internal controls. Some examples include inadequate or no:

• Supervision and review
• Separation of duties
• Management approval
• System controls

Pressure can be imposed due to:

• Personal financial problems
• Personal vices such as gambling, drugs, extensive debt, etc.
• Unrealistic deadlines and performance goals

Rationalization occurs when the individual develops a justification for their fraudulent activities. The rationalization varies by case and individual. Some examples include:

• “I really need this money and I’ll put it back when I get my paycheck”
• “The District doesn’t pay me enough so they really owe me this money”
• “I just can’t afford to lose everything – my home, car, everything”