Page 32 - The Edge - Summer 2020

Red Flags Should Alert School Officials of Fraud or its Possibility

CONTINUED FROM PAGE 29

Evans, with 30 years as a forensic accountant, has seen all “Many fraudsters have stolen from multiple places – maybe
types of fraud in the public and private sectors. He stressed even other school districts – but were never prosecuted,”
the importance of having what he calls a segregation of Evans said. “There is no record of it.”
duties. “More than one person has to look at what’s going
on,” he said. “Make sure the people doing accounting aren’t It’s important to have established controls that are followed
in charge of the money. The accounting and reconciling strictly. “Intimidate potential fraudsters from attempting to
should be performed by someone without access to the steal in the first place,” he suggested. “Controls must be
money. Someone else has to look at financial information.” followed at all times – no exceptions.”

He also recommended having checks signed by two
individuals.

Red flags that fraud may be happening in your school
involve financial indicators, such as a sudden change in
your financial position, no money for training or supplies,
football games are not generating the same revenue they
did in the past, and the PTO can’t fund its projects as it did
previously.
There are even more red flags or signs of fraud. They
include employee behavior, which could involve bullying
or abusive behavior; employees who rarely take vacations;
an employee who suddenly comes into wealth from “a rich
uncle,” or an employee with known gambling issues or
drug or alcohol problems.

“Don’t ignore these things,” Evans said.

It’s not that difficult to prevent fraud – or at least to
minimize it, Evans said.

“Don’t rely only on trust,” he cautioned. “Most
embezzlement is by someone that was trusted.”

He recommended developing reasonable control procedures
regarding cash-handling and reconciliations.

“Don’t become complacent,” Evans said. “Do get involved
in the financial results. Don’t ignore the boring accounting
stuff. Review cancelled checks and bank statements. Fraud areas of particular vulnerability to watch include
Review credit card statements. And, don’t rely on your places were cash is collected, including cafeterias, sports,
annual audit to find fraud.” and PTO events.

Evans also recommended performing background checks Another area that is ripe for fraud is the use of credit cards
and ask for references before hiring someone. and fuel cards. “Who has them?” Evans said. “It’s not good
CONTINUED ON PAGE 34

|
32 THE EDGE SUMMER 2020