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No. 828
SECTION:
OPERATIONS
TITLE:
FRAUD
ADOPTED:
DECEMBER 18, 2008
REVISED:
EASTON AREA
SCHOOL DISTRICT
828. FRAUD
1.
Authority
The Board expects all Board members, district employees, volunteers, consultants,
vendors, contractors and other parties that maintain a relationship with the school
district to act with integrity, due diligence, and in accordance with law in their duties
involving the district’s resources. The Board is entrusted with public funds, and no
one connected with the district shall do anything to erode that trust.
2.
Definitions
Fraud, financial improprieties, or irregularities include but are not limited to:
1.
Forgery or unauthorized alteration of any document or account belonging to the
district.
2.
Forgery or unauthorized alteration of a check, bank draft, or any other financial
document.
3.
Misappropriation of funds, securities, supplies, or other assets.
4.
Impropriety in handling money or reporting financial transactions.
5.
Profiteering because of insider information of district information or activities.
6.
Disclosure of confidential and/or proprietary information to outside parties.
7.
Acceptance or seeking of anything of material value, other than items used in the
normal course of advertising, from contractors, vendors, or persons providing
services to the district.
8.
Destruction, removal, or inappropriate use of district records, furniture, fixtures,
or equipment.
9.
Failure to provide financial records to authorized state or local entities.
10. Failure to cooperate fully with any financial auditors, investigators or law
enforcement.
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11. Other dishonest or fraudulent acts involving district monies or resources.
3.
Delegation of
Responsibility
The Business Manager or designee shall be responsible to develop and implement
internal controls designed to prevent and detect fraud, financial impropriety, or fiscal
irregularities within the district, subject to review and approval by the Board.
The Business Manager shall be responsible for maintaining a sound system of
internal controls that is designed to identify potential risks, evaluate the nature and
extent of those risks, and manage them effectively.
District administrators are responsible to be alert to an indication of fraud, financial
impropriety, or irregularity within their areas of responsibility.
The Superintendent shall recommend to the Board for its approval completion of a
forensic audit when it is deemed necessary and beneficial to the district.
The Superintendent shall ensure the appropriate authorities are notified, pursuant to
state law, when cases of fraud, embezzlement or theft have been identified.
4.
Guidelines
Reporting
43 P.S.
Sec. 1423
18 U.S.C.
Sec. 1513
Pol. 317
An employee who suspects fraud, impropriety, or irregularity shall immediately
report his/her suspicions to the Superintendent.
If the report involves the Superintendent, the employee shall report his/her
suspicions to the Board President.
Employees who bring forth a legitimate concern or suspicion about a potential
impropriety shall not be retaliated against. Those who do retaliate against such an
employee shall be subject to disciplinary action.
Investigation
The Superintendent shall have primary responsibility for conducting necessary
investigations of reported fraudulent activity.
Based on his/her judgment, the Superintendent shall coordinate investigative efforts
with the district solicitor, district auditor, and insurance agent.
If the Superintendent is involved in the complaint, the Board President is authorized
to initiate investigation of the complaint and coordinate the investigative efforts with
individuals and agencies s/he deems appropriate.
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Records shall be maintained for use in an investigation.
Individuals found to have altered or destroyed records shall be subject to disciplinary
action.
If an investigation substantiates the occurrence of a fraudulent activity, the
Superintendent shall present a report to the Board and appropriate personnel.
The Board shall determine the final disposition of the matter, if a criminal complaint
will be filed, and if the matter will be referred to the appropriate law enforcement
and/or regulatory agency for independent investigation.
Confidentiality
The Superintendent shall investigate reports of fraudulent activity in a manner that
protects the confidentiality of the individuals and facts.
All employees involved in the investigation are required to maintain confidentiality
regarding all information about the matter during the investigation.
Results of an investigation shall not be disclosed to or discussed with anyone other
than those individuals with a legitimate right to know, until the results are made
public.
Prevention
In order to prevent fraud, the Board directs that a system of internal controls be
followed that include but are not limited to the following:
Segregation of Duties - Where possible, more than one (1) person will be involved in
pieces of financial transactions. No one (1) person shall be responsible for an entire
financial transaction.
Payments - Payments shall be made only by checks. No cash transactions shall be
permitted. Check signers shall be approved annually by the Board and will consist of
persons not involved in the transaction. All checks shall have at least two (2)
signatures.
Bank Reconciliations - Bank statements and cancelled checks shall be reconciled by
individuals who are not authorized to sign checks, nor involved in check processing.
Access to Checks - Physical and electronic access to school district checks and
accounts shall be limited to those employees with designated business functions.
Capital Assets - The business office shall maintain updated lists of district capital
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assets.
Training - Administrators shall be responsible for ensuring that employees under
their supervision receive training regarding fraud prevention.
References:
Sarbanes Oxley Act of 2002 – 15 U.S.C. Sec. 7201 et seq.
Whistleblower Protection – 18 U.S.C. Sec. 1513
Board Policy – 317
PSBA Reviewed 1/08