10/11/2010 Fraudulent credit cards which were confisticated from various FNB banks, during a discussion on the latest card fraud trends held in Sandton JHB. (960) Photo: Leon Nicholas
10/11/2010 Fraudulent credit cards which were confisticated from various FNB banks, during a discussion on the latest card fraud trends held in Sandton JHB. (960) Photo: Leon Nicholas

Watch out for campus fraud

By Leanne Jansen Time of article published Mar 17, 2015

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Durban - South African universities were fertile ground for fraudsters, in part because of the collegial environment and compounded by staff freezes which reduced financial controls, a higher education conference in Durban heard on Monday.

The warning came from financial forensic experts who warned that universities were just as vulnerable to fraud as any other organisation. They said fraudsters were usually employed at an institution for six years or longer and were in an executive function.

In some cases there was a notion that everyone was involved in fraud, “so why not me?”

The conference, hosted by forensic audit firm KPMG, and the Higher Education Internal Audit and Forensics Audit forum, was attended by delegates from universities around the country, and included vice-chancellors and IT and finance practitioners.

While fraud at universities was not unique to South Africa, it was thriving here, said one of the keynote speakers, Ranesh Sivnarain, the chairman of the Higher Education Internal Audit and Forensics Audit Forum.

Sivnarain, who is also the head of forensic services at the University of KwaZulu-Natal, said it had adopted a zero tolerance approach which involved dismissal and laying of criminal charges.

The forum, which was established last year, reports to the Finance Executives Forum of Higher Education South Africa.

Sivnarain told the conference that budget cuts and the freezing of posts contributed to fraud, because with fewer staff the segregation of duties was no longer possible. The result was a slackening or the absence of stringent financial controls.

Fraudsters would resign to avoid disciplinary hearings.

Sivnarain said these individuals would sometimes go on to gain employment at other universities.

Fraudsters were likely to be highly trusted employees who worked over holidays and weekends. Possible warning signs included an employee’s lifestyle far exceeding salary, and documents being locked away.

Instances of the abuse of research funds included academics using the money to pay for family holidays, falsifying conference invitations, submitting false expense claims and awarding contracts to spouses.

Sivnarain said that establishing a whistle-blowers’ hotline had proved successful, and that it was best to outsource this to an independent firm to avoid identification and victimisation of whistle-blowers.

 

Fellow keynote speaker Candice Padayachee, associate director of forensic services at KPMG, said during her presentation that universities were as vulnerable to fraud as any other organisations and emphasised the importance of cultivating an “ethical culture”.

The competition for admission to university, and the desire to have a university qualification at all costs, had opened universities up to increased instances of fraud.

The rationale of fraudsters was often “everyone else is doing it” or “my employer owes it to me”.

The top fraud risks in higher education included exam fraud, expense claim fraud, procurement fraud and misuse of research funds.

She too argued that budget cuts and vacancies meant weakened financial oversight.

Examples of fraud at universities:

* Staff colluding with suppliers, such as charging for maintaining 14 fire extinguishers when there are only 10.

* Invoices issued and paid but no goods or services provided.

* An administrator changes the exam marks of a friend and because of ‘blind trust’ in the employee there is no oversight.

* Falsifying of CVs. A manager concealing his dismissal from a previous employer and providing a falsified pay slip and degree certificate.

* A manager shares the system user name and password with a PA who then buys electronic goods and buys flights and accommodation for employees who do not exist.

Universities were cautioned to guard against other risks including:

* IT infringements (hacking, accessing pornography and excessive internet use).

* EFT fraud (changing banking information to direct payment to an employee’s bank account or a recipient related to an employee).

The Mercury

* This story has been updated after it was  incorrectly stated that Ranesh Sivnarain, the chairman of the Higher Education Internal Audit and Forensics Audit forum, was a university vice-chancellor. The error was introduced during the editing process and is  regretted. The forum reports to the Finance Executives Forum of Higher Education South Africa, and not the finance committee, as stated.

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