b'FRAUDIMPOSTER SYNDROMESince schools have been forced to adapt their usual working practices over the past 18 months, the risk of fraud has risen exponentially. Kerry Gallagher and Gemma Higginson reportThe pandemic has led to changes to working practicesthe first time (for example, PPE and testing equipment), and internal controls for many schools and those withand therefore have had to transact with unfamiliar whom the school interacts such as parents, supplierssuppliers. Procurement processes have also had to etc. Unsurprisingly, this has created additionaladapt to make purchases quickly, remotely and outside opportunities for fraudsters and so there has been aof normal cycles. marked increase in the level of attempted and actual fraud because of those new working practices. A desire, and government direction, to pay suppliers quickly can lead to a relaxation of usual controls and a Increased staff absence and remote working reduction in the number of reconciliations. Fraudsters During the past 18 months, many schools have seencan more easily submit false or inflated invoices and increased levels of staff absence due to illness,can send false bank account change requests.shielding and childcare constraints. The need to recruit new or temporary staff and requiring existing staff toCredit card usage has increased due to home working work from home has brought about additional fraudand the avoidance of using cash for pandemic health risks:reasons. A desire to clear the balances to ensure the Increased recruitment activity or temporary staffingcards can carry on being used can result in a lack of usage can lead to the relaxing of establisheddetailed reconciliation. Fraudsters can also use the processes and controls.cards for personal expenditure. The desire to bring new staff on board quickly can lead to a relaxation of recruitment controls andCase study 2checks. As a result of staffing gaps, a temporary member of Timesheets and agency invoices may be subject tostaff became responsible for reconciling and approving limited verification due to internal pressures. corporate credit card expenditure. Realising they were Remote working can make it easier for ghostoperating entirely independently, the individual began employees to be entered onto the payroll.to use the credit card for personal expenditure, until they had spent almost 25,000 before being caught. In addition, staff working remotely may not follow existing control processes and usual levels of oversightSo as we get back to the new normal, what can you and challenge may be relaxed. Staff not being togetherdo to protect your school and manage the risk of fraud? in one place makes it harder to sense check unusualHow well is your school set up to prevent and identify transactions. The use of email to approve transactionsthe risk of fraud? Good counter-fraud measures fall into also increases the schools exposure to loss from cyberfour broad categories, so start by asking yourself the security breaches. following questions.Case study 1 GovernanceA fraudster intercepted emails between an independentDo you understand what fraud and bribery are within school and a group of parents, amending the bankthe context of the schools operating environment, account information on requests for payments for extrasand what your responsibilities are? Does this take (outside of the normal fee billing process). The fraudsterinto account non-core activities such as trips and continued to intercept and manipulate email activitylettings? to conceal the fraud. By the time the school becameIs there appropriate tone from the top, and is this aware of the issue the monies, ultimately totalling overadequately communicated to your staff, parents, 30,000, had been dissipated and could not be traced.suppliers and the general public?Is a member of the board of governors accountable Urgent need for goods and services for the strategic management of counter-fraud Operating in a pandemic has meant a change to theactivity?procurement of goods and services. Schools haveIs fraud risk specifically included in the terms of needed to acquire supplies of certain types of goods forreference of your audit or finance sub-committee? 32 www.independentinsight.netIwww.iexcellence.co.ukIwww.i25awards.co.uk'