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Ethics and Fraud Prevention Training
February 2021
Internal Audit Department
Rachel Snell, MPA CIA, CFE, CRMA, CICAInternal Audit [email protected](714) 438-4602
Miguel Beltran, BSInternal Audit [email protected]
AGENDA
Ethics and Fraud Terminology
Ethics and Fraud Review
Hypothetical Scenarios
Prevention: Tips and Tricks
Reporting Concerns
Fraud: breach of confidence for profit or gain.
Waste: to consume/ spend uselessly.
Abuse: wrong or improper use; misuse (power/privileges).
Ethics: moral principles; values relating to human conduct.
Source: Dictionary.com 08/15/20
COMMON TERMINOLOGY Conflict of Interest:
employee benefits from official actions/ influence.
Favoritism: favoring one person/group over others with equal claims; partiality.
Whistle-blower: person who makes public disclosure wrongdoing.
COMMON TERMINOLOGY
Cash/Asset: money, check, item converted into cash.
Misappropriation: to take an asset entrusted to one’s care wrongfully or dishonestly.
Source: Dictionary.com 08/15/20
Embezzle: to appropriate fraudulently to one's own use.
Collusion: an understanding between 2+ people to gain something illegally.
CCCD ETHICS POLICYBP 3050 CODE OF PROFESSIONAL ETHICSMicrosoft Word - BP_3050_Code_of_Professional_Ethics.docx (cccd.edu)
District Employees Shall: • Be honest, accountable…good stewards of District
assets.
• Maintain environment free from incivility, aggression, bullying…
• Follow laws, codes, regulations, and policies and procedures.
• Avoid conflicts of interest, or even the appearance of conflict of interest…
• Maintain confidentiality regarding information about students or employees…
With respect to students, all District employees:• Keep foremost in mind at all times that the
colleges and District exist to serve students.
• Promote an equal-access learning environment and equal access to the educational resources that will help students succeed.
Quiz: What are some examples of non-compliance with this policy?
Inappropriate relationships with parents.
Conflict of interest with a vendor (friend/family).
Favoritism towards certain parents/children or employees.
Dishonesty.
Related Parties.
Failing to report conflicts of interest or suspected/known wrongdoing.
(UN)ETHICAL EXAMPLES
Quiz: What are you doing to protect yourself from engaging in any of these activities or even just the perception that you might be?
CONFLICTS OF INTEREST AND FAVORITISMConflicts of Interest: Do you provide services to parents outside of the Children’sCenter? Do those parents/children receive or expect special treatment? Cansomeone influence your decision-making, and if so, under what conditions?
Favoritism: Have you received special treatment for yourself and/or your childrenas an employee of the Center? Have other employees or their children receivedspecial treatment? Do you “like” some parents or their children more than others?
Perception: If the general public/other parents knew of your actions, would theybe okay with it? Is there a difference between what is actually happening versuswhat is perceived to be happening in terms of employee/program reputation?
FRAUD, WASTE, AND ABUSECash: Do you use petty cash? Where is cash stored? Who has access to it? Whoverifies what is disbursed? Do you ever take something out and promise to put itback later? Does anyone else?
Purchases: Who reviews/approves purchases? Is there a threshold value wherethere is no review or oversight? Is the purchase excessive or necessary? Fromwhom are you buying, friend or family? Are the items purchased for your ownpersonal use? How do you use the Center’s resources (supplies and other assets)?
General Questions: Have you noticed a change in someone’s behavior? Is there aback-up who can perform the job if the primary is on vacation or on leave? Whatis your level of due diligence?
Pressure
Unexpected Bills
Living Beyond Means
Financial Loss
Addiction
Excessive Debt
Personal/Family Issues or Pressures
Rationalization
Nobody Will Notice
Underpaid: “They owe me!”
I Will Pay it Back
Boss is Unfair/Mean
Family/Friend Needs It: “Good Cause”
Opportunity
Cash/Assets Unsecured
No Reconciliation
No Cameras/Alarms
No Records/ Documentation
No Oversight
Never Takes a Vacation
No Segregated Duties
WHY GOOD PEOPLE DO BAD THINGS
HYPOTHETHICAL SCENARIO #1Your long-time friend has asked you to help get her child admitted to theChildren’s Center. She’s a single mom, trying to make ends meet, and she hasthe cutest little boy EVER! You ask your co-worker if your friend’s child can jumpahead of others on the waiting list. You also know that your friend will hire you tobabysit her child after hours a couple days per week. From your perspective it’s awin-win situation because your friend receives inexpensive child care and youmake a little extra money.
1. What are the ethical dilemmas in this scenario?2. Do you think this could happen at our Children Center, why or why not?3. What would you do if someone close to you asked you to use your position
to influence others?
HYPOTHETICAL SCENARIO #2You have worked with your co-worker for more than 10 years and have become verygood friends. Your co-worker recently learned of some bad news and has been onedge lately, moody, short tempered, and distant. One day you hear your friendtalking to a child in a loud voice, which in your opinion, violates policy and procedure.You know you should report it, but you don’t want your friend to get in trouble. Afterall, it’s never happened before and she’s just going through a rough time.
1. What is the ethical dilemma in this scenario?2. Do you think this could happen at our Children Center, why or why not?3. What do you think is the best course of action to take?
HYPOTHETICAL SCENARIO #3An employee was living “high on the hog” because the money was coming into thehousehold. Suddenly, this employee started having financial problems because afamily member became very sick and requires a lot of medical care. The employeeworks hard and is well liked by friends, co-workers, and teachers. The employee isentrusted to purchase food, supplies, and other items. To help make ends meet, theemployee steals a little food and supplies just to get by for the week. Knowing the trustgarnered by co-workers, the employee starts taking larger amounts of food andgroceries, slowly over time.
1. What is the rationalization, pressure, and opportunity for the employee to steal?2. If someone were stealing from the Children Center, would you know?3. What would you do if you suspected this scenario was occurring at the Children’s
Center?
CONSEQUENCES TO THE CHILDREN CENTERQUIZ
1. Do you think your actions as an employeecontribute to the success of Children’sCenter?
2. What role do you think a strong ethicalculture and fraud prevention practicecontributes to the success of theChildren’s Center?
3. In what ways do you think unethicaldecisions and/or fraud, waste, and abusepotentially harm the Children’s Center?
TIPS AND TRICKS Do not accept cash, and safeguard cash and other assets.
Disallow unauthorized persons in and around cash/asset areas.
Count cash/deposits outside of public viewing areas.
Do not mix personal monies with business monies or use employer resources for personal use.
Deposits and purchases should be counted and reconciled by 2 different people.
TIPS AND TRICKS Watch for red flags, irregular behavior. Report suspicious activity.
Follow policies/procedures, including review/approval protocols.
Maintain good records, and submit mileage reimbursements and time/leave requests.
Avoid abuse of position/power, including favoritism, conflicts of interest, or perception of conflict.
Trust, but verify! If it sounds too good to be true, it usually is!
REPORT AN ISSUE
Internal Audit Website/Email: https://www.cccd.edu/departments/Chancellor/InternalAudit.cfm;[email protected]
If you believe fraud, waste or abuse, or cash theft has occurred, report itdirectly to immediate supervisor and internal audit. If the incident involvesyour immediate supervisor report the incident to her/his immediatesupervisor and internal audit. You may also report a concern anonymouslyon the Internal Audit website (scroll to the bottom of the Home Page):
REPORT AN ISSUE
Anonymous Reporting
Any Questions?
