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Fraud and theft: How to protect your school

Fraud and theft: How to protect your school

Ways you can help prevent theft against your school.

A December 19, 2018 NBC news article  gave an account of how a Florida resident scammed a Texas school district out of $2,000,000.

Before you dismiss this as something that could never happen in your school or community, think about all the public items that can be used to propagate fraud. Open records, board agendas, board minutes, RFPs and bid packets leave an open trail that is easy to exploit.

This is becoming a much larger issue than most people realize. The scam normally comes about when a district is doing a bond issue or a lease purchase. The most common deception in this situation is to send a billing to the district or the district's bank on letterhead of a common vendor or a vendor involved in the project. There are several different locations where the money will be sent. The money will be delivered to a bank account that a person has been recently opened and then transferred. If the operation is run by an out-of-country group, the money will probably never be recovered. If it is run by someone in the United States, the chances increase that someone will be apprehended and charged with the crime.  

The best method to prevent this issue is to protect emails and financial data. Due to Open Records Acts, we can’t really stop someone from knowing who our vendors are, when we are doing large projects or with whom our assets reside. However, we can protect our emails and other vital information. 

For example, if you use Google mail, you need to have the two-step verification system at a minimum. No one should do any school business using a personal email address.  

Additionally, before the treasurer sends something out, the transfer must be confirmed. If the bank makes a transfer on a lease-purchase, the school should have an authorization network. After all, this is public money, and schools must follow normal procedures for encumbrances.  

Best business practices can often be tedious, but procedures have been established to protect the public’s interest. Even if we do everything right, there can still be an issue, but proper procedures do reduce the likelihood of fraud or theft. In the new year, make a point to examine several items:

  1. Proper procedures for encumbrances and issuance of warrants need to be reviewed.
  2. Insurance policies and surety bonds need to be reviewed for extent of coverages in the event of cyber crimes and general coverages.
  3. Inventories of buildings, vehicles, electronics, etc. should be evaluated for accuracy and actual value and cost replacement.
  4. An inventory of school emails would be appropriate; school business should not be done from a personal email.

These are just a few suggestions.  As always if we can be of assistance, please feel free to contact me anytime.  

Andy Evans

Director, Finance

Andy serves as the Finance Director for OPSRC. In this role, he provides help in financial and business-related areas for schools. This includes budgets, managing cash flow, Estimate of Needs, federal programs and general service to aid in the effective use of district resources. Additionally, Andy serves as a resource in customizing budget spreadsheets, projection sheets, and other financial tools essential to administrators in maintaining their district’s financial health.

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