Intentional misstatement of financial reporting and research data.
Examples of fraud include:
- Adjusting balances to meet budgeted amounts, misclassifying transactions, recording transactions in the wrong period, fabrication of financial or research data, withholding information, and false documentation.
Ways to Prevent:
- Ensure all transactions are reviewed by someone other than the preparer. Segregation of duties reduces the risk of both erroneous and inappropriate actions by ensuring a minimum of two people are a part of every transaction.
- Approvers should review supporting documentation, question unusual items, and make sure that necessary details are included to justify the transaction before approving.
- The person authorizing should have sufficient knowledge to vouch for validity of the transaction. Ask questions if you don’t understand!
- Ensure that employees are well acquainted with the University’s policies and procedures that pertain to their job responsibilities.
- Ensure that the department has an adequate training program for employees. The University’s Learning Management System has numerous online as well as in-person trainings available.
- Ensure Principal Investigators and Department Administrators are knowledgeable of the guidelines that must be taken into consideration on sponsored projects including the Guide to Research Compliance and UC Davis policy on Integrity in Research, PPM 220-05.
Ways to Detect:
- Perform account reconciliations by comparing different sets of data to one another, for example comparing cash receipt and deposit records to the general ledger.
- A critical element of the reconciliation process is to investigate and resolve differences. If a transaction incorrectly posts to an account, then a correcting journal entry should be requested and the reconciler should follow-up to ensure the error was resolved.
- Perform comparisons of current financial balances to budgets and prior periods to identify unexpected results or other anomalies that require follow-up.
- Ensure identified deviations are explained.