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Fraud Awareness

Fraud Awareness. Audit, Business & Technology Committee September 23, 2004. Presentation Focus. Roles and Responsibilities Identifying and Reporting Setting the Tone. Organizational Structure. Roles and Responsibilities. Office of the Inspector General District Management and Staff

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Fraud Awareness

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  1. Fraud Awareness Audit, Business & Technology Committee September 23, 2004

  2. Presentation Focus • Roles and Responsibilities • Identifying and Reporting • Setting the Tone

  3. Organizational Structure

  4. Roles and Responsibilities • Office of the Inspector General • District Management and Staff • Contractors and Vendors

  5. OIG Charter The OIG is responsible for: • Detecting and preventing waste, fraud, abuse, and unethical behavior. • Identifying systemic issues and systemic steps to reduce fraudulent or unethical activities. • Managing the District’s Fraud Hotline.

  6. OIG Charter The OIG is responsible for : • Recommending remedies where fraudulent or unethical behavior has been found. • Coordinating and sharing information with appropriate law enforcement officials when criminal activity is suspected.

  7. OIG Charter District management is responsible for: • Establishing policies and systems of internal control that discourage fraudulent or unethical behavior. • Reporting any allegations or evidence of misconduct to the Inspector General.

  8. Employee Code of Ethics “We are committed to reporting gross mismanagement, significant waste of funds, abuse of authority, threats to safety, violations of our Code of Ethics, laws, rules, regulations, bulletins, policies and procedures, or other conduct that damages our integrity or reputation, to our supervisor, the Ethics Officer or the Inspector General.”

  9. Contractor’s and Consultant’sCode of Conduct “The LAUSD encourages good faith reporting of all suspected violations of this Code of Conduct.” “All suspected violations shall be reported immediately to the Office of the Inspector General or the Ethics Office for investigation.”

  10. Fraud, Waste and Abuse Fraud Waste Abuse

  11. What is Fraud? Intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to the person or someone else.

  12. What is Waste? Incurring unnecessary costs as a result of inefficient or ineffective practices, systems, or controls.

  13. What is Abuse? Administrative violations of an organization’s policies, rules, regulations, or procedures resulting from the improper use of funds, equipment, supplies, or position.

  14. “The Fraud Triangle” Opportunity Motive Rationalization

  15. Think Fraud To Find Fraud Skeptical Attitude Questioning Mind

  16. Think Fraud To Find Fraud • Identifying fraud is more of a mind-set. • Focus on exceptions, oddities, and patterns. • Fraud and stupid can look just alike. • Learned primarily from experience – not from textbooks. • Must think like a thief.

  17. Fraud Awareness Program • Ethics Program • Fraud Hotline • Fraud Awareness Seminars • Videos • Fraud Alerts

  18. OIG Fraud Hotline (213) 241-7778 1-866-LAUSD-OIG or 1-866-528-7364 www.laoig.org Office of the Inspector General Fraud Hotline Center 333 S. Beaudry Avenue, 12th Floor Los Angeles, CA 90017

  19. Calling the Fraud Hotline • Who committed the alleged fraud? • What was the fraudulent activity? • Where did the fraud take place? • When did it happen? • How much was misappropriated? • How was the fraud committed? • Who else knows about it?

  20. Indicators of Fraud • Refusal to produce records, files or documents • All copies, no originals • No exceptions or errors • Altered payroll documents

  21. Indicators of Fraud • Excessive overtime • Lack of competitive bidding • Payments to a vendor post office box • Significant life-style changes

  22. Indicators of Fraud • Objection to an internal audit • Refusal to take vacation • Key personnel going to work for vendors • Lack of segregation of duties

  23. Fraudulent and Unethical Behavior • Embezzlement of cafeteria funds • Inappropriate use of the Internet • Payroll fraud

  24. Fraudulent and Unethical Behavior • Fraudulent purchase orders • Violation of policies • Falsification of documents

  25. Fraudulent and Unethical Behavior • Ethics violations • False claims • Embezzlement of real estate funds

  26. Setting the Tone Management is responsible for: • Setting the proper tone. • Creating and maintaining a culture of honesty and ethics. • Establishing appropriate controls.

  27. Setting the Tone • You get what you reward and encourage what you allow. • Ethics codes don’t make people ethical. • Wisdom is knowing which path to take next – integrity is taking it.

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