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Fraud
Reporting Fraud, Misuse, and Illegal Acts Texas Southern University Operating Manual Section XXXI, Whistle Blowing Policy, pursuant to Government Code Chapter 554, Protection for Reporting Violations of Law, the University may not suspend or terminate the employment of, or otherwise discriminate against, a staff member who reports a violation of the law to the appropriate law enforcement authority if the employee’s report is made in Good Faith. Legal Remedies are made available to resolve any form of retaliation.
Legal ramifications for the Auditor and the University dictate strictly confidential treatment of information obtained in connection with fraud, misuse, or illegal act investigations. You should contact one of the following persons to report any improprieties.
Contacts:
Texas Southern University
Internal Audit Office
Mrs. Yolanda Nimmer-Williams, Interim Director 713.313.7415 or nimmerye@tsu.edu
Mr. Keith Beckford, Senior Auditor 713.313.7419 or beckford_ka@tsu.edu
Mr. Edward Gantt, Senior Auditor 713.313.7414 or gantt_ex@tsu.edu
Mr. Ron Cornelius, Senior Auditor 713.313.7418 or corneliusrw@tsu.edu
Ms. Shindana Jackson, Senior Auditor 713.313.6823 or jacksonsm@tsu.edu
Texas Southern University
General Counsel Office
Ms. Gita Bolt, General Counsel 713.313.7950 or bolt_gp@tsu.edu
Ms. Lynn Rodriguez, Attorney 713.313.7950 or rodriquezel@tsu.edu
Texas Southern University
Department of Safety
Mr. Thaddeus Seal, Chief of Police 713.313.1814 or sealt@tsu.edu
Great care must be taken in the investigation of suspected improprieties or irregularities so as to avoid incorrect accusations or alerting suspected individuals that an audit is underway and also to avoid making statements which could provide a basis for a suit for false accusation or other offences. Accordingly, the reporting individual should:
A. Not contact the suspected individual to determine facts or demand restitution;
B. Not discuss any facts, suspicions or allegations associated with the case with anyone, unless specifically directed to do so by the Offices of Internal Audit, University Police, or the Office of General Counsel.
All inquiries from the suspected individual, their representatives, or their attorney shall be directed to the Office of General Counsel. Proper response to such an inquiry should be: "I'm not at liberty to discuss this matter". Under no circumstances should there be any reference to "what you did", "the crime", "the fraud", "the forgery", "the misappropriation", etc.
All reproduction of documents, evidence and reports shall be performed within the secured work area of the Offices of Internal Audit or University Police. The Internal Audit Office will keep its workpapers secure and limit access to only those individuals designated by the Director of Internal Audit. No written communications will be issued by the Internal Audit Department until the investigation is complete.
To the extent permitted by the applicable provisions of the Texas Open Records Act, confidentiality of those reporting dishonest or fraudulent activities will be maintained. However, confidentiality cannot be maintained if that individual is required to serve as a witness in legal proceedings.
Internal Audit will determine the validity of allegation through completing the following steps:
A. Notify the employee that the information obtained may be discussed with the President and/or Board of Regents prior to conducting detail discussions with University employees.
B. Inform the employee that the source of the information provided is strictly confidential except for possible disclosure to the aforementioned parties,
C. Prepare an Incident Report summarizing the contract. Indicate whether or not the incident will become an Unscheduled Audit. Document support for inclusion or exclusion in the current year's Audit Plan.
D. Maintain the report in the Internal Audit Department. Neither the original nor any copies of the report will be removed from the Department.
E. If criminal activity is suspected, prepare a brief memo is explaining why the scope was expanded and the degree to which the scope was expanded (100% of the population or transactions in the suspected period may be examined - use auditor's judgment).
Management is responsible for establishing and maintaining a system of internal control that provides reasonable assurance that improprieties are prevented and detected. Each Manager should be familiar with the types of improprieties that might occur in his/her area and be alert for any indication that such a defalcation, misappropriation or other fiscal irregularity has occurred.
Illegal Acts that will be investigated by the Internal Auditing Department are defined as:
A. Dishonest, illegal or fraudulent act involving University property,
B. Forgery or alteration of checks, drafts, promissory notes, and securities;
C. Forgery or alteration of employee benefit or salary related items such as timecards, billings, claims, surrenders, assignments, changes in beneficiary, etc.;
D. Forgery or alteration by employees, of student related items such as grades, transcripts, loans, fee or tuition documents, etc.;
E. Misappropriation of funds, securities, supplies or any other asset;
F. Illegal or fraudulent handling or reporting of money transactions;
G. Acceptance or solicitation of any gift, favour, or service that might reasonably tend to influence the employee in the discharge of his/her official duties (conflict of interest);
H. Destruction or disappearance of records, furniture, fixtures, or equipment where theft is suspected;
I. Acts which are against or not authorized by Federal, State, or Local Law.
Illegal Acts that will not be investigated by the Department of Internal Auditing include suspected incidences of substance abuse and sexual harassment. Knowledge of such incidences will be referred to the President and University Counsel for disposition.
In order to avoid the use of investigatory techniques that might prevent evidence from being used in a criminal prosecution, University Police will coordinate the criminal investigation once probable criminal activity has been detected. The Office of Internal Audit shall assist the University Police in investigations of suspected defalcation, misappropriation and other fiscal irregularities that require accounting and auditing knowledge of System records.
All efforts will be made to minimize the number of persons involved in the investigative phase. Others will be included only when the investigative process cannot progress without that individual's knowledge of the incident. The communication process will generally occur as follows (use auditor's judgment):
The Office of Internal Audit will supervise all audits of allegations of defalcation, misappropriation, and other fiscal irregularities. When an audit reveals suspected criminal activity, or an audit is initiated due to an allegation of criminal activity, the University Police will be notified immediately.
A. Initial Identification in the Internal Auditing Department
B. President and/or Board of Regents will be verbally update during investigative phase. Incidences of fraud, misuse, or illegal acts must be reported to the Board of Regents, as soon as the act has been reasonably substantiated.
C. Generally the General Counsel will be informed at the conclusion of the investigative phase. The University Counsel may be updated during the investigative phase at the discretion of the President. The University Council may be contacted by the Internal Audit Department if legal assistance is necessary for the progress of the investigation.
D. If the investigative phase substantiates fraud, misuse or illegal acts, written communication in the form an audit finding will be issued to the Vice President of affected area(s) and alleged employee(s).
E. The decision to present evidence to the appropriate legal authorities lies with the President. The Internal Audit Department strongly supports such contacts.
Management will support fiduciary responsibilities and will cooperate with law enforcement agencies in the detection, investigation, and reporting of criminal acts, including prosecution of offenders. Every effort should be made to recover losses.
The Internal Audit Department is required to annually provide written disclosure of all knowledge of fraud, misuse, and illegal acts on an annual basis in the Internal Audit Representation Letter.
An Audit Report will be issued by the Internal Audit Department at the conclusion of the audit. In order to avoid damaging the reputations of innocent persons initially suspected of wrongful conduct, and to protect the University from potential civil liability, the results of audits/investigations will not be disclosed or discussed with anyone other than authorized representatives of law enforcement and/or regulatory agencies, and only those persons associated with the University who have a legitimate need to know such results in order to perform their duties and responsibilities, subject to the provisions of the Texas Open Records Act.
Audits revealing violations of the Penal Code for which an Audit Report will be issued, should be reduced to Final Report form only after consultation by University Police, the local Prosecutor, or the Office of General Counsel to ensure that appropriate documentation of the facts has been achieved in order to permit appropriate personnel action, protect innocent persons, support appropriate civil or criminal actions, document claims made pursuant to applicable fidelity bonds, preserve the integrity of the criminal investigation, prosecution, and avoid unnecessary litigation.
The flow of communication will follow the steps outlined in "5" above.
A. The Auditor will refer to any evidence obtained supporting the suspected fraud, misuse, or illegal act as an unresolved discrepancy or irregularity. The terms fraud, misuse, or illegal acts must not be used.
B. The Auditor may verbally identify the alleged person(s) involved, the source of the information and the general nature of the unresolved discrepancy or irregularity.
The audit will be conducted as a routine audit, except that the audit will in some cases be performed on a surprise basis. (Use auditor's judgment) All of the routine procedures will be followed and will include at a minimum:
A. Audit Work Program
B. Notice of Scheduled Audit
No reference either directly or implied will be made regarding fraud, misuse, or illegal acts.
Comments or inquiries from the suspected person(s) regarding fraud, misuse, or illegal acts will be answered with the statement indicating that a routine audit is being performed.
A bill recently passed by the Texas Legislature requires that losses due to fraudulent or unlawful conduct be reported to the State Auditor whenever an agency head has reasonable cause to believe that such a loss may have occurred. The "reasonable cause to believe" standard has been met when one of the following occurs:
A. The basis of the belief is more than mere suspicion.
B. The Audit Department is able to provide specific facts, which support the belief that a loss may have occurred as a result of fraud or unlawful conduct.
C. Neither probable cause nor a suspect has to be identified.
The Agency Head may report incidents by letter, via the Internet (dkt@sao.state.tx.us), or by calling the State Auditor's Hotline (1-800-TX-AUDIT). An SAO Incident Report is typically a written report submitted to the Internal Audit Department by the State Auditor's Office. The reports may be discussed with the President and/or Board of Regents (use auditor's judgment). Neither the written report nor any copies may be removed from the Internal Audit Department.
The Report will include the following items:
A. A Description of the Incident.
B. The Estimated Value of the Loss.
C. The identity of all persons who may have involvement or knowledge relating to the loss and a description of such involvement or knowledge.
D. A Description of the Evidence.
E. The name and telephone number of the agency employee responsible for resolving the incident.
Upon receipt of a report, the White Collar Crime Unit of the State Auditor's Office (SAO) will contact the agency to obtain additional information in order to determine investigative responsibility. The SAO may investigate the report or may monitor an investigation conducted by the agency.
The reason for limitation in the number of persons informed in the investigative phase is based on the possibility that the suspected fraud, misuse, or illegal act may be unsubstantiated. The audit may produce evidence indicating that the suspected fraud, misuse, or illegal act did not occur. If the claim is unsubstantiated, document the following results.
A. Document the results in the Workpapers. Do not remove the Audit File from the Internal Audit Department.
B. Clearly communicate lack of evidence of the suspected fraud, misuse, or illegal act to the source of the allegation (if applicable), the President and/or Board of Regents (if initially informed in the investigative phase), and all other parties informed by the Internal Audit Department during the investigative phase.
C. Issue in a formal Audit Report
When an audit initiated due to an allegation of criminal activity has failed to detect any criminal activity, the Director of Internal Audit has the discretion to stop the audit. However, in regard to criminal investigations conducted by University Police, only the Office of the District Attorney is authorized to review the progress of the criminal investigation and make the legal determination regarding whether to pursue a criminal prosecution.
Each investigation of possible dishonest or fraudulent activities has the potential to provide a unique insight into specific activities conducted by the University and may disclose control weaknesses and other areas that need additional auditing or management's attention.
Each investigation will be reviewed by the Internal Audit Office to determine if additional work needs to be done in order to provide the basis for taking any correction action.
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Phone: 713-313-7011