7 Steps to Prevent Fraud in Education

By: Tonya Mead, CFE, PI, MBA,MA Educational Psychology

What might a school leader do to lower the risk of fraud, data and computer-assisted crime in her school building?

  1. Negative school climate adversely impacts adults too. Stabilize your building.

Find ways to reduce social upheavals brought about by re-structuring, school reform, and reduction-in-force initiatives. Structural upheavals present a window of opportunity for criminals. Burgess [6], Clifford Shaw and Henry McKay [7] utilized the theory of social disorganization to describe increased incidents of crime in transition zones. Recent research posits that the likelihood of crime increases in environments undergoing rapid transformation [8].

  1. Resist the temptation to collude. Recognize that temptation may prove overwhelming for others on your team.

In addition to structural change, the attitudes and behaviors of high-level authorities can prevent or exacerbate fraudulent activities. The Treadway Commission [9] states that “historically most major frauds are perpetrated by senior management in collusion with other employees” [10, p. 5].

Examples of collusion and corruption at senior levels involve principals and education service providers conspiring to commit federal program bribery, aiding and abetting, and conspiracy to launder money intended to reform the lowest performing schools. As an example, a principal admitted to “funneling public school funds to nearly 1,000 consultants, local businesses, parents, family and friends” [11, para. 15].

  1. It is never too late to fill-in your knowledge gaps for data and technology.

Your students could pay the ultimate price for the failure to remain up-to-date on the uses, limitations and vulnerabilities of data and technology. Once confidential student information is divulged, the threat of child identity theft is so severe that the Federal Trade Commission (FTC) issued this warning, “a child’s social security number can be used by identity thieves to apply for government benefits, open bank and credit card accounts, apply for a loan or utility service, or rent a place to live…” [14]. The FTC urges consumers to take immediate action if their child’s information is being misused.

  1. Support district and state internet policy and training or create your own.

In comparison to the typical American, educators and college students spend more time on the internet, making them (and the networks used) targets for malware. Malware is utilized for the purposes of grand theft and identify theft. In 2010, hackers stole $996,000 by inserting a virus into the authorization codes used by the controller at the University of Virginia. The scammers fraudulently wired money from the university’s BB&T bank account to the Agriculture Bank of China.

Lack of pre-service and embedded on-the-job training pose significant threats. Reports of internet users receiving fraudulent emails show that “70% of internet users have unintentionally visited a spoofed website and that more than 15% of spoofed users admit to being phished” [16].

  1. Consistently convey clear messages about acceptable and unacceptable behaviors.

The lack of clear messaging increases environmental vulnerabilities to computer assisted crime. Jeffrey concluded that misconduct has a higher probability of occurring when victim organizations lack positive social reinforcers for employee emulation [17]. This involves positive social pressure from peers and role modeling to alleviate inconsistencies in spoken, written, and nonverbal communication. The highest caliber leaders create and support ethical decision-making by communicating and modeling high ethical standards. “These top managers create and maintain an ethical culture by consistently behaving in an ethical fashion and encouraging others to behave in such a manner as well” [18].

  1. Manage by walking around with a heightened awareness for red flags for fraud, data and computer-assisted crime.

Fraud in education is relatively a new concept. In the absence of formalized training, educate yourself on the symptoms and red flags for financial and data improprieties that could occur on the school level.

Internal control systems should be embedded throughout the structure and across functions to deter, detect, investigate and resolve fraud, data and computer-assisted crime. If your district has not provided supports for management control, take the initiative and lower your risk for fraud, data and computer-assisted crime. Training yourself to keep a heightened awareness for fraud. Just as your antenna is on alert for student disciplinary issues and the threat of violence, with time you will be able to spot potential problems before they become tomorrow’s headlines.

  1. Open your door and listen intently to your cheerleaders and your adversaries.

Wouldn’t you like to hear negative information about your school, students and staff first hand before you get the gut wrenching call from the district and state office? Pity the chap that had to read about the situation in the newspapers, hear on the radio or catch a glimpse of it blasting on the nightly news. If you rely upon outsiders to relay bad information, you’ve missed the opportunity to brainstorm, trouble shoot and respond in partnership with the bearer of the bad news. Most often the whistle blower has a vested interest in righting a wrong. The sooner you hear about something gone awry, the easier it is to trouble shoot and damage control before the situation becomes untenable.

Tonya J. Mead, CFE,  PI, MBA, MA, Certified K-12 Administrator and School Psychologist is president of Shared Knowledge, LLC https://ishareknowledge.com and author of Fraud in Education: Beyond the Wrong Answer

Works cited can be found in Chapter Two of Fraud in Education: Beyond the Wrong Answer