Insight

Fraud & Misconduct in the Education Sector

By:
Darryn Hockley,
Thomas Caldow,
Vivian Tong,
Liz May
19 Jan 20232 min read
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Schools and education facilities are not immune to fraud and misconduct. It can be in the form of theft, misappropriation of funds, or the granting of contracts to known associates of key people.
Contents

In a recent police investigation, it was revealed a former Melbourne High School business manager stole more than $350,000 by defrauding the school over a nine-year period by changing the details on invoices.

At Grant Thornton, we have conducted forensic audit engagements in the education sector to review the financial administration of employees and their involvement in the awarding of contracts, issuing of invoices to suppliers and employment of family members.

Set out below are some of our key findings, which an education facility's board and management should consider when assessing their exposure to potential fraud and misconduct:

• Awarding of contract(s) for the provision of services in breach of internal approval policies

• Awarding of contracts to suppliers where there is a strong personal connection or business association between a key decision maker from the education facility with the successful applicant

• Awarding of contract(s) to different suppliers to undertake the same or similar function

• Members of the finance department approving payment(s) for specific suppliers and employees outside of normal business hours

• Members of the finance department approving payment(s) for specific suppliers outside of approval processes and policies

• Duplicate data including bank accounts for suppliers and employees

• Incomplete and inaccurate employee records (e.g. terminated employees, Working with Children Checks)

• Granting of pay increase(s) to family members without appropriate oversight and in breach of internal policies

• Regular issuing of refund(s) and/or credit note(s) against specific suppliers

In our experience, the risk for potential fraud and misconduct is heightened when there is longevity with a key decision maker who abuses their position of ‘trust’ and/or 'power' by ignoring certain policies and procedures.

It is important that all education facilities are regularly undertaking a review of their internal processes and actively seeking to engage forensic accountants when there is suspicion regarding the conduct of employee(s). 

For more information on the financial advisory services provided to the education section including financial viability assessments, restructuring and fraud & misconduct investigations, contact our team of experts today.

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Authors
  • Darryn Hockley
    Darryn Hockley Darryn Hockley is a Forensic Consulting specialist with a background in providing expert reports and expert witness services in valuation disputes, loss and damage assessments, tax disputes and negligence claims. View Profile
  • Thomas Caldow
    Thomas Caldow Tom has spent his entire career working in the Forensic Accounting field, starting in a prominent forensic accounting firm in Adelaide, where he worked for over six years before commencing with Grant Thornton in March 2017. View Profile
  • Vivian Tong
    Vivian Tong Vivian specialises in the preparation of business valuations for family law matters and commercial proceedings, business valuations for non-litigation purposes and conducting forensic audits. Her work involves knowledge in various industries including agricultural, engineering, consulting and the education sector.
  • Liz May
    Liz May Principal, Financial Advisory at Grant Thornton