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Fraud, Waste & Abuse
What is Fraud? Typically requires 3 key elements:
1) Misrepresentation – “did something wrong”
2) Done intentionally
3) Resulted in unauthorized personal gain
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Who Commits Fraud? Those having:
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Who Commits Fraud? (Source: 2006 ACFE Report on Occupational Fraud-study of 1134 fraud cases)
Sometimes the best personnel:
- Majority of perpetrators were long-tenured, managers and executives, male, and middle-aged
- 64% of frauds were committed by perpetrators with over 5 years’ tenure
- Median loss for employees with < 1 year’s experience was $45,000, jumping to $263,000 for those with 10+ years’ experience
How Does Fraud Occur?
- Billing – Employee submits invoice to customer for personal expenses
- Expense reimbursement – Employee expense report claims nonexistent meals, personal travel, etc.
- Non-cash – Employee steals business services, identity of staff/students, office supplies, stamps, etc.
- Payroll – Taking unreported sick leave, claiming overtime for hours not worked, ghost employees
- Skimming – Employee not recording payments received from customers, diverting into own account
How Is Fraud Detected? (Source: 2006 ACFE Report)
The University of Toledo Anonymous Reporting Line, 1-888-416-1308, A dedicated number available to all UT faculty and staff and third parties to report potential concerns in:
- Financial Management, Patient Safety, Regulatory Adherence
- Allows 24-hour availability; callers may remain anonymous; managed by a third-party vendor
- Does not replace existing reporting mechanisms on campus or in the Health System
Internal Controls Are Important for Reasons Other Than Preventing or Detecting Fraud
- Controls help detect/prevent honest errors (ex., keypunch/data entry errors)
- Computerized controls help ensure accuracy and efficiency (ex., time entry eliminating timesheets)
- Redundant or unnecessary steps
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