MnSCU auditor: Minor fraud cases are up, eating into our time

I’m at the monthly trustees meeting of the Minnesota State Colleges and Universities (MnSCU) system.

Beth Buse, who heads up MnSCU’s internal auditing office, says fraud investigations have jumped this year over last. Although the cases have not involved significant monetary losses, they are eating up more and more of her time.

She told the trustees:

“We get quite a few allegations reported to my office.”

In fiscal years 2009 and 2010, investigating fraud allegations at various colleges and universities took up 11-12 percent of her staff hours. This past year it has eaten up 17 percent, and is the third-largest time suck, after time spent following up on other prior audit findings (34 percent) and processing audited financial statements (27 percent.)

Here’s what they’re seeing, according to the report. (I’ve put a few things in bold.) I haven’t been able to get any specifics yet:

A summary of the types of incidents commonly reported to Internal Auditing were:

Theft of equipment or vandalism: commonly includes the theft of laptop and desktop computers and other information technology equipment such as overhead projectors. College and university campuses commonly see vandalism to their buildings and other property. In most cases, colleges and universities report these incidents to local law enforcement.

Financial aid fraud: in the past few years we have seen a substantial increase in student financial aid fraud primarily at the two year institutions. My office works closely with the Inspector General’s Office of the U.S. Department of Education on these incidents.

Bank account incidents: these types of incidents commonly include fraudulent checks being drawn on an account or attempts to gain unauthorized electronic access to an account.

Internal Auditing assisted with other inquiries and investigations primarily centering on allegations of employee misconduct or misuse of property.

Buse said MnSCU institutions aren’t doing anything wrong, but that the U.S. has seen growth in identity theft and the number of fraud rings.

“It’s a two-year (college) phenomenon nationally. Two-years are open-access institutions, and tuition is low, so the (financial aid) checks are larger. Students register for courses, take out all the financial aid they can, and then get a big overage check in the end.”

I’ll try to get the report at some point.