In yet another incident involving the alleged theft of school funds, a Victorian school accountant has been accused of stealing almost $5 million from four Catholic schools in Victoria.
The Herald Sun reports that the accountant faces 412 charges of theft over an alleged crime spree that lasted 13 years. The accused's partner, who worked with him at some of the affected schools is also charged with possessing proceeds of crime.
The case will be heard in the County Court of Victoria in 2016.
A familiar story
Although this incident still remains a case of alleged theft by a school employee, it follows a list of of financial crimes at a non-government schools this year. Unfortunately, because of available cash reserves and their public profile, non-government schools are desirable targets for theft and media attention. The perfect recipe for reputational damage.
In January we wrote an article about a former business manager of a large girls’ school in Sydney who has been charged with fraud in an amount which is reported to total over $460,000.
In that article Fraud & Corruption - what can your school do to prevent it?, we set out some specific examples of governance programs, such as Whistleblower and Fraud and Corruption Control Programs, that can be implemented by a school to help prevent such losses and consequential media attention.
Ultimately it comes down to having a robust internal governance, risk and compliance infrastructure.
Increased governance requirements aren't a solution
Some schools may be forgiven for thinking that if they comply with the raft of increased school governance requirements being introduced across all States and Territories, they will have sufficient controls in place to reduce the risk of fraud occurring. This is not an illogical view, especially given the fact that most schools have their annual financial statements audited and certified by an external independent auditor.
However, given that often, the perpetrator of 'insider' school theft is a person employed to manage its finances, it can be hard for fraud and corruption to be detected by external auditors unless it is glaring, or they have been retained to investigate a specific concern. At best external auditors may expose fraud after the event. What is really required is preventative strategies that focus on the types of transactions and internal governance weaknesses, commonly targeted by fraudsters.
Steps for your school to manage fraud risks
While it is important to have a range of policies and procedures to reduce the risk of fraud and corruption occurring at your school, it is also important to have operational controls in place to manage those risks.
Other governance initiatives that a school can use to help prevent criminal activities by its employees such as fraud and corruption include:
- effective pre-employment screening;
- separation of duties when implementing financial controls;
- insisting that employees in high-risk areas take leave regularly;
- rotation of employees where the potential for corrupt behaviour exists (e.g. procurement); and
- fraud and corruption awareness training.
These measures are especially relevant in this Victorian case, given that the alleged perpetrators were in a relationship and worked together, creating greater opportunity.
The real victims
No one wins from incidents of fraud and corruption at a school. Students, staff and the broader school community all suffer from the significant breach of trust. The perpetrators generally start small and end up getting in over their heads. Ultimately most get caught in the end and face severe penalties including criminal convictions and jail time.
For this reason, and the importance of protecting reputation, all school governors, principals and senior executives should review their internal systems and procedures to identify potential weaknesses that may be targeted by potential fraudsters.
