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Workplace Fraud in Higher Education on the Rise

Higher Education Susceptible to Fraud

Higher education institutions are just as vulnerable to fraud as other organizations. I know from first-hand experience that “even” academics can engage in fraudulent actions. Here are a few examples:

  • Top-level university administrators take university-funded trips to overseas locations ostensibly to set up exchange programs that never come to fruition
  • Deans and chairpersons create unnecessary positions (e.g., "assistant dean for undergraduate studies is my favorite"). Why can’t this job be done by the existing department chairs with faculty involvement?
  • Faculty members develop software and other products through their university-sponsored research funds, and then market or sell the products through their own private companies.
  • Professors send a paper to various conferences in their native countries just to have paid trips back home. I even had a faculty member in my department do just that for a conference in Seoul Korea during the 1988 Olympics.
  • Instructors order desk copies of books from publishers under the guise of considering them for adoption as a textbook, then turn around and sell them online. Professors can make several hundred dollars per month in this scheme.

Fraud can also extend to athletic departments in colleges and universities. The National Collegiate Athletic Association (NCAA) has enforced stricter policies on athletes in colleges. The purpose of these policies is to encourage athletes to perform well in classrooms for eligibility and maintaining scholarships. This has the effect of making some coaches and athletes feel the added pressure to remain eligible, and cause them to resort to fraudulent action.

Florida State University, the University of New Mexico, and Georgia Southern University are a few examples of institutions recently found in the news for academic fraud regarding athletes. At Georgia Southern University, the men's basketball assistant coach and team manager were given two years' probation for completing course work for athletes in danger of being ineligible. In some cases, faculty may also be pressured to reduce course work or fudge grades for athletes by the university or athletic department. These acts can be detrimental to the reputation and morale of the campus as a whole.

In another case, a former Vassar College employee was arrested and charged with the embezzlement of $2 million from the university. Arthur H. Fisher was a project manager who conspired with his wife in a scheme against the college. The two set up a fictitious construction company and charged the college for work not performed.

In May 2011, five medical school professors at Stanford University were disciplined for breaching the school's conflict of interest policy. The faculty members were being paid to give promotional speeches on behalf of drug makers. The concern was that the relationship between pharmaceutical companies and academic researchers could intentionally influence medical research and in effect the practice of medicine. Stanford University's honorable reputation took a blow as it endured an investigation and was scrutinized for not enforcing and effectively communicating its policies.

Yasmin Vazquez, a project administrator with the Association of Certified Fraud Examiners (ACFE), identifies preventive measures that institutions of higher education can take to reduce the instances of fraud. Most higher education systems employ a hotline to report suspicious behavior. The hotline offers a way for students, employees, and other parties to anonymously report suspected fraud without fear of retribution. As a leading model, the Texas A&M University System advertises and encourages the use of its risk, fraud, and misconduct hotline. The reporting program is available 24 hours a day, 365 days a year. All anonymous tips are taken seriously and forwarded to the appropriate authority for investigation. This perception of detection in itself might be significant enough to deter fraudulent behavior.

The college or university can reduce its susceptibility to fraud by having clearly written policies and procedures regarding ethics, fraud, and abuse. The document must outline appropriate codes of conduct and the punishment for violating these rules. These should be consistently enforced and communicated to faculty and staff. In addition, the roles and responsibilities of the Internal Audit Department and Board of Trustees for the university must be included.

I’m not sure whether instances of fraud in higher education are just more frequently identified today than in the past because of more sophisticated monitoring devices or increased reporting, or whether there simply is more fraud. I believe the latter is true because the general decline in ethics in society has affected academe just as it has government, politics, banking, and business in general. All too many people act first and think about the consequences later, a recipe for fraud. It is a “slippery slope” because once you commit fraud, and especially if you get away with it, you are much more likely to continue that pattern of behavior in the future. The key is to not take the first step down the slippery slope.

Blog posted by Steven Mintz, aka Ethics Sage, on September 28, 2011