Dive Brief:

• James Sullivan, former inspector general for the Chicago Board of Education, advises districts to hire an inspector general or internal auditor to uncover fraud and deter future fraud attempts.
• Sullivan writes for District Administration that an inspector general investigates allegations of waste, fraud, financial mismanagement and employee misconduct, while an internal auditor uncovers fraud or inefficiency through routine audits — and both have the potential to save districts money and time in the long term.
• Internal watchdogs like inspectors general or auditors can deter fraud through their presence and the tone they set in the institution, and Sullivan recommends districts also consider installing an anonymous fraud hotline.

Dive Insight:

Education institutions often pride themselves on being open and trusting, but that work environment does not always lend itself to long-term financial safety. Building checks and balances into the workflow of administrative staff members can help prevent fraud. The same people who deposit money, for example, should not be the ones responsible for reconciling accounts.

When anti-fraud efforts are particularly visible, they can serve as deterrents. Even beyond employing an internal watchdog, districts should make sure his or her efforts are well-known. Surprise audits can also be helpful, as can transactional analysis software, which flags unusual financial patterns.