13Definition of Misappropriation “In law, misappropriation is the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate or by any person with a responsibility to care for and protect another's assets (a fiduciary duty).”
14Definition of Fraud Black’s Law Dictionary defines fraud as: “all multifarious means which human ingenuitycan devise, and which are resorted to by oneindividual to get an advantage over another byfalse suggestions or suppression of the truth. Itincludes all surprise, trick, cunning or dissembling,and any unfair way by which anotheris cheated.”
15Adoption of a false appearance Fraud, cont.dissemblingAdoption of a false appearance
16WHY ARE CHARTER SCHOOLS A Fraud, cont.WHY ARE CHARTER SCHOOLS ATARGET FOR FRAUD ?
18Fraud, cont.What are Some Examples of Fraud? List a few…
19Fraud, cont.Falsified or exaggerated attendanceNot recording vacation or sick time offPaying vendor “buddies” for no work productPurchasing supply items for personal useUnsubstantiated travel expensesDuplicate or fictitious employees
20Auditors that actively plan and search for fraud Fraud, cont.Auditors that actively plan and search for fraud
21What ingredients are needed for fraud? How many ingredients? Fraud, cont.What ingredients are needed for fraud? How many ingredients?
28Fraud, cont. Think about these three things when planning Fraud, cont. Think about these three things when planning an audit or administering oversightWHO HAS OPPORTUNITY?WHO HAS MOTIVE?WHO HAS ACCESS?
30OPPORTUNITY and ACCESS is limited with a good system of what? Fraud, cont.OPPORTUNITY and ACCESS is limited with a good system of what?
31Internal ControlsWe have all heard the words “internal controls” over and over. Simple internal controls do a lot in helping to prevent fraud and errors that look like fraud.
32Internal Controls, cont. Simple INTERNAL CONTROLS help mitigate fraud, improve protections against motive, opportunity, and access, as well as shield employees from accusations of fraud.
33What Do Internal Controls Include? An organizational culture that promotes awareness and takes fraud seriously at all levels
34What Do Internal Controls Include?, cont. Fraud detection, oversight, and auditing is more about awareness and observation than checklists.
35What Should We Consider? What are some audit and oversight metrics that should be considered when evaluating a charter school’s financial performance?
36How Do We Evaluate Performance? How do you evaluate your charter school’s performance and ability to continue as a going concern?
37How Do We Evaluate Performance?, cont. Evaluate the audit report? Compare the charter’s budget, first interim, second interim, and unaudited actuals?
38Better Charter Oversight and Auditing Metrics Commonly EvaluatedMore DetailsEvaluate audit reportCompare budget, 1st, 2nd, and unaudited actualsPrepare a comparison of audit reports and trend analysisCompare budget and unaudited actuals within the year and against the prior year
39Better Charter Oversight and Auditing Metrics, cont. Trend analysis at the object code level.Common size analysis with revenue and expenses.Examine AGED accounts payable at the Individual Vendor level.Audit ADA WITHIN the charter’s attendance program.Evaluate the charter each year as a going concern.
40Better Charter Oversight and Auditing Metrics, cont.
41Better Charter Oversight and Auditing Metrics, cont.
42Better Charter Oversight and Auditing Metrics, cont.