Home » Fraud Examination – Misappropriation of Assets

SITUATION: Extended care is sometimes offered by schools to parents who may be unable to leave work and need help caring for their children after school.  In one school district, however, employees were accused of continually and blatantly violating policies on accepting cash tuition payments for extended care. The team at FSS was hired to conduct a forensic examination to determine the extent of the violations and whether cash was being misappropriated by the employees.

STRATEGY: From the outset, our forensic examination uncovered an extended care program in disarray. Records were incomplete and attendance and billing software required by the school district had not been fully implemented, leaving the program vulnerable to fraud, waste, and abuse. We developed a multi-pronged strategy that coupled sophisticated forensic technology with tried and tested fraud investigation techniques. Technology helps us identify, organize, and analyze electronic data and our fraud investigation skills allow us to gather information from a disparate array of sources—from old-fashioned paper documents to interviews with employees. While the school district’s records were incomplete, the FSS team was able to trace funds and attendance through a maze of sources, including bank records, physical receipt books, registration records, manual attendance records, and other supporting documentation to determine expected tuition and tuition payments received. The information we collected allowed us to compare the tuition expected from the extended care program with the payments that had been received. This analysis confirmed that employees had accepted cash payments in violation of district policy and that cash had been misappropriated.

RESULTS: We presented the district with our findings and recommendations, including anti-fraud programs and controls that could be implemented to reduce the risk of fraud, waste, and abuse. Based upon the findings of our fraud examination, the school district terminated several employees, tightened its anti-fraud policies and stepped up its oversight of the extended care program.