Department of Internal Audit and Compliance

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?

Who Commits Fraud?? Those having:

  • Ability to rationalize – Fraudulent actions? taken weren’t really stealing
  • Opportunity – Due to too much authority resting with one person or a poor internal control environment
  • Pressure – Desperation for wealth or to obtain extra money

Fraud Traingle

?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)

How Is Fraud Detected

The University of Toledo Anonymous Reporting Line,?? 1-888-416-1308 or ?A dedicated number?available to all UToledo 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

Last Updated: 2/18/20