Magazine article University Business

Keeping an Eye on the Lock Box: How to Protect against Internal Theft

Magazine article University Business

Keeping an Eye on the Lock Box: How to Protect against Internal Theft

Article excerpt

Higher education is big business, but many schools are operating with barely more fiscal security than the average kid's lemonade stand. Thefts from colleges are persistent, increasing and coming from all around campus. Common targets for embezzlers include bookstores and cafeterias, tuition collection, and even government grants to professors. Administrators should implement a proactive risk management program that includes checks and balances in the accounting department, regular audits of invoices and other fraud prevention techniques.

Employees eating your lunch

Food services is one area where relaxed controls can put institutions in some sticky situations. Most students pay for their meals through university meal plans, but cash and credit card transactions involving non-students can create exposure.

Strict oversight of the register isn't enough on its own. Food services at schools with thousands of students are a major operation with potentially hundreds of suppliers creating a ripe area for bad apples. At LaSalle University in Philadelphia, a former director of food services embezzled $5 million over 20 years by creating a phony food vendor, generating fake invoices and keeping the payments for himself. A simple requirement for a second check of vendor invoices might have uncovered this fraud before two decades passed and millions disappeared.

Who stole my cheese?

The easiest way to steal money is to go right to the source. As elementary as that seems, tuition embezzlement continues to be a persistent issue in higher education. It's just too tempting for dishonest employees, and many schools have done little to prevent it. Many tuition thefts are as simple as employees having access to both tuition checks and deposit accounts without any secondary oversight.

The pattern of long-term employees committing most university embezzlements continued recently with an administrative employee convicted of stealing $185,000 from The University of Vermont's Vermont Institute for Artisan Cheese over a six-year period. All she had to do was add herself as a co-payee to tuition checks and then deposit them in her personal bank account. If proper controls had been in place, the fraud would have been detected almost immediately when the tuition accounts were reconciled. …

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