Danger Of Fraud

According to the Audit Commission’s report, Protecting the Public Purse 2011: Fighting Fraud Against Local Government, school-based fraud is the largest group of new suspected cases relating to local services.

Consequently, they have produced some briefing documents to help people concerned with financial governance in various bodies, including one for school governors.

In the briefing document, the Audit Commission states that school governors are individually and collectively responsible for proper control of the school’s finances and that “the buck does not stop with the financial administrator”.

The report also cites the extra autonomy over budgets enjoyed by academies and free schools as a potential problem and asserts that: “Experience shows that fraud risks increase during periods of change.”

The concern is that the changes could offer increased scope for fraudulent transfers from classroom budgets, misappropriating petty cash or faked expenses, among other financial crimes.

The Commission recommends that schools review their whistle-blowing arrangements in accordance with the British Standards Institute Code of Practice and that there are adequate fraud prevention and detection procedures in place.

The Commission’s Head of Counter Fraud, Alan Bryce, suggests behaviour that might ring alarm bells for governors, such as staff consistently working late, increased stress on the part of staff or avoidance when asked direct questions.

Mr Bryce advocates that any governor having suspicions of financial impropriety should act quickly and tell someone about their concerns, preferably the internal or external auditor.

He also stresses that governors should never accuse anyone they suspect of malfeasance directly or try to investigate the matter themselves, but, most importantly, neither should they ignore their concerns and do nothing about them.

As an accountant, Gill Freeman specialises within academy finances and charity tax.

Posted in News.