Fraud and Corruption Control

Fraud and Corruption Control in Schools — Implementation Guidance

Schools are obliged to ensure they implement fraud and corruption controls. This guidance provides a checklist for some of the fraud and corruption risks commonly encountered in schools and the types of controls that can assist in addressing these risks. Staff should report all suspected fraud and corruption to the Department’s Fraud and Corruption Control Unit on 03 7022 0121.

Key risks and controls

The Department’s Fraud, Corruption and Other Losses Control Policyrequires principals to ensure that fraud and corruption risks in their school are identified and controls put in place to mitigate those risks. Fraud and corruption risks in schools often arise in relation to:

• cash handling
• procurement
• finance
• assets
• employment

The first step to control these risks is to comply with the Department’s policies and guidelines (including the Finance Manual, procurement policies and Human Resources policies).

This Fraud and Corruption Control in Schools Implementation Guidance may also assist schools in identifying risks and controls relevant to them and can be adopted as appropriate.

Checklist of risks and controls

Cash and finance

Risks

Cash and finance fraud and theft risks include:

• misappropriation of cash
• misappropriation of funds through bank transfers
• misuse of corporate cards
• falsification of finance records to disguise theft

Controls

• When developing, reviewing and implementing the school’s Cash Handling policy, ensure it deals with:
  • limiting the use of cash where practicable
  • transparency and oversight of cash handling
  • specific controls for fundraisers, such as fetes and so on and including physical security of cash and strong cash handling procedures.
    Note: A template Cash Handling policy is available on the School Policy Templates Portal (login required). Schools can modify the template to suit their local circumstances.
• maintain key finance controls including:
  • segregation of duties
  • appropriate bank signatories and;
  • security of bank account and finance system credentials
• implement and maintain appropriate policies for petty cash and local reimbursements
• restrict school purchase cards to staff approved by School Council and ensure that Undertaking by Cardholder is complied with
• ensure physical security of cash and keys

Seek guidance from School Finance Liaison Officers on implementing controls for any other finance risks identified.

Employment, conduct and recruitment

Risks

Employment, conduct and recruitment fraud and corruption risks include:

• incomplete or inaccurate information presented by employee during recruitment process
• falsified medical certificates provided in support of leave applications
• misappropriation via payroll payments
• failure to process leave applications resulting in overpayments

Controls

When recruiting:

• undertake thorough referee checks to elicit information about the applicant’s ability to perform the essential functions of the role and to verify an applicant’s claims
• validate employment history
• ensure current or immediate past employer is contacted to confirm the preferred applicant is suitable for child-connected work and is a fit and proper person (questions are set out in the Recruitment in Schools Guide)
• ensure at least one member of the panel is a person trained by the Merit Protection Boards in the principles of merit and equity

Ensure:

• any conflicts of interest are identified at the earliest opportunity in any recruitment process and an appropriate management plan is developed, documented and approved in the eduPay Conflict of Interest Register
• any conflicts of interest in the management of employees (such as where a principal’s family member is employed at the school) are declared, an appropriate management plan is developed and periodically reviewed, and that the declaration and plan are recorded and approved using the Declaration – Conflict of Interest form in eduPay
• supporting evidence is provided when personal leave with certificate is claimed. If you identify inconsistencies or concerns with the certificate consult with Employee Conduct Branch for advice
• payroll transactions are reviewed and validated
• transparency over key functions at risk of fraud and corruption, such as receipting and banking. Reluctance to provide transparency over these functions, including unwillingness to take leave or to rotate duties with other administration staff (where appropriate), can be a red flag that something is not right
• eduPay administrator access is regularly reviewed and ensure it is limited to only those required to have access
• processes are developed for ensuring all approved leave is processed

Procurement

Risks

Procurement fraud and corruption risks include:

• misusing position to award contracts for personal gain
• decisions influenced by gifts, benefits or hospitality
• misappropriation by third parties redirecting invoice payments (usually through email compromise)

Controls

Ensure:

• staff engaging in procurement undertake training and are aware of (and access) available supports
• all suppliers offers of gifts, benefits and hospitality are refused
• any identified conflicts of interest are appropriately managed
• all procurement activities are designed to ensure value for money. Consider the full value of the procurement activity, rather than individual transactions, when determining the appropriate procurement process.
• supplier bank accounts are verified, both on engagement and at any time they are updated, through multiple communication channels (e.g. phone and email)
• duties at various stages of the procurement process are segregated – e.g. use different people to approve and receive goods/services
• due diligence is conducted to establish legitimacy of suppliers (e.g. checking details on tenders and quotes, conducting ASIC searches to identify possible links between prospective suppliers and employees, or whether entities have appropriate assets or business facilities)
• variations in contracts and project scope after approval are maintained
• the maintenance of robust contract management and oversight to enforce contractual terms, milestones and deliverables
• staff sign invoices to verify goods and services have been received and ensure they are checking quality

Assets

Risks

Asset fraud, corruption and theft risks include:

• theft of assets
• purchasing and disposal decisions made to obtain a personal benefit

Controls

Ensure:

• staff engaging in procurement undertake training and are aware of (and access) available supports
• physical security of assets and keys
• processes for purchasing and disposal of assets are not influenced by prospect of personal gain
• any incidents of theft or other losses are reported to police and to the Fraud and Corruption Control Unit