The education sector experiences the repercussions of bribery and fraud as much as any other organisation. Rachael Tiffen, of the Counter Fraud Centre at the Chartered Institute of Public Finance and Accountancy explains how to be wise to the corruption.
The financial integrity of some academies has recently come under question with the Education Funding Agency (EFA) publishing a series of financial notices to improve in December 2014. Weak governance was also flagged with four trusts exposed as lacking in these areas – namely Theale Green Academy Trust, Durham Free School Limited, the Business Academy Bexley, and the Bishop of Rochester Academy Trust. Good financial management and strong governance are cornerstones for protection against fraud and corruption within schools and academies, so it’s essential to get it right.
Another concern raised by the leading whistleblowing charity, Public Concern at Work (PCaW), is that the lack of clarity in the education sector is also causing practical problems for whistleblowers. In the first half of 2013 PCaW saw an 80 per cent increase in calls from the education sector. After careful analysis of these cases, to identify what the major concerns were and why more workers were seeking advice on how to raise concerns, the issue became clear. Fundamentally, the cases demonstrated that the education sector lacked clarity on reporting procedures for whistleblowing and how to raise concerns at work.
Being under investigation for financial mismanagement, weak governance and poor reporting procedures is a serious matter and not one to be ignored. It is no longer the remit of a sole administrator to look after receipts, signed cheques, HR issues, and a set of accounts. Leadership in education must therefore focus on establishing clear guidelines and policy for whistleblowing, as this will form a significant part of preventing and detecting fraud and misconduct in schools, academies and universities.
The education sector, and the UK in general, still has some way to go when it comes to addressing the issues surrounding whistleblowing and creating internal reporting systems that enable individuals to step forward and highlight concerns. An interesting phenomenon is that newer employees are more likely to blow the whistle on an organisation or individual and 39 per cent have less than two years’ service, according to PCaW’s ‘Whistleblowing: the inside story’ study.
To date there has been very little substantive research undertaken on why this is the case. One reason could be that they are less engrained and therefore less influenced by the culture of an organisation, or it maybe that they are more likely to spot misconduct at work as they look at information with a ‘fresh pair of eyes’. As with many things, it is often easier to examine the reasons why people fail to take action in the first instance. The information below, for example, is taken from the Independent Whistleblowing Commission, which reported last year, and sheds light on common reasons why workers in general fail to speak-up.
It reported that: “Evidence suggests that workers fail to speak up because of fear of reprisal and/or a concern that they will not be listened to and that nothing will be done. Too often, those who speak up are ignored or their concerns do not come to the attention of management. In the YouGov survey commissioned by PCaW in 2013, of those that had a serious concern, 66 per cent said they had raised it. When asked about the most likely barrier to raising a concern this was stated as the fear of reprisal or the response of colleagues. Further cases analysed in ‘The inside story’ revealed that 74 per cent of whistleblowers said they were ignored when they first raised a concern. This research also established that it is likely individuals only raise a concern once (44 per cent) or twice at most (39 per cent) before giving up. In its March 2013 report into out-of-hours GP services in Cornwall run by Serco, the National Audit Office found that whistleblowers felt inadequately protected and were therefore reluctant to raise concerns internally.”
What is clear is that individuals who have previously tried to raise concerns have had to show remarkable courage in coming forward. A lack of well-defined guidance, effective processes and protection can deter people from blowing the whistle or reporting misconduct at work. However, employees play a vital role when it comes to preventing, detecting and protecting against fraud and corruption in schools, academies and universities.
Therefore a whistleblowing policy should play a central role for all education establishments. Having in place a defined procedure for reporting fraud and misconduct at work is an integral part of good governance, compliance and risk management. The benefits of getting this right and listening to a concern raised can help prevent disaster, avoid costly litigation, and potentially preserve a reputation.
A solution to this workplace challenge for the education sector is a new whistleblowing e-learning package from the Chartered Institute of Public Finance and Accountancy (CIPFA) that empowers employees to act in the right way if they witness misconduct at work.
The e-learning is suited for use in organisations where a whistleblowing policy already exists. Using scenario-led content plus case studies from charities and local authorities, the course sets out how to raise and report concerns at work and aims to clear up ‘grey areas’ around processes, complaints and definitions. It also aims to provide a comprehensive understanding of whistleblowing and why it is important.
Staff will learn: what whistleblowing is; how best to raise concerns; where staff can raise concerns; what to expect and how their organisation will support them, and rights and options for support.
The CIPFA Counter Fraud Centre has worked with PCaW and audit, advisory, accounting and tax specialists Mazars to create the course.
Another area for senior management teams to be aware of within schools, academies and universities is bribery. Bribery is not always obvious, and sometimes it’s cloaked in goodwill. It’s these subtle variations of approach and behaviour, which often cause individuals and organisations to fall foul of the UK Bribery Act 2010. Frequently the issue is not the bribe itself, rather the back-story, context, form and language in which it is dressed.
This is especially the case in situations where it is neither clear nor obvious what the risk or threat is. Identifying and being aware of ‘red flags’ in behaviour will help individuals to notice whether what is being suggested is a bribe or not. So, when dealing with clients, developers, customers or contractors, what can individuals do to avoid being exposed to a potential bribe?
In essence, it’s about being professional and taking care, which means don’t: agree to meet alone; allow over-familiarity; give out your personal mobile number; meet informally outside working hours and away from your organisation’s premises (and certainly don’t do so without getting formal approval); allow too frequent contact or over familiarity that may be acceptable with friends, colleagues and family but not from people with whom you only have a commercial relationship; discuss your private life, or social or recreational interests of you or your partner; accept offers, discounts or other services or products by the client, customer or contractor; accept hospitality, gifts etc., you yourself wouldn’t pay for from your own pocket, and don’t do anything that makes you feel uncomfortable, obligated or might be open to misinterpretation or might be difficult to explain to your manager, a journalist or an investigator.
It’s also essential that your school, academy or university has the necessary policies and procedures in place, plus a well-publicised and confidential means for getting advice or for reporting unwelcome approaches or suggestions. These will act as a system of checks and balances to help prevent bribery and misunderstanding.
Even if fraud or corruption are not obvious, school, staff, parents and the community should always stay alert for warning signs such as poor record-keeping and a lack of documents supporting financial transactions, different procurement duties being carried out by the same person rather than different people, or a school operating outside its approved budget. Today, leadership development is at the forefront of academic agendas and many educational establishments are investing in training to help develop skills and experience within existing teams to prevent fraud and corruption at work. Putting in place some baseline prevention techniques could also prevent a fraud, and deter those that may take advantage of opportunities.
Fraud risks in the education sector are very similar to those across the public sector with few exceptions. CIPFA has published detailed guidance in partnership with Mazars to help schools and academies prevent fraud and to spot the warning signs early. Some key areas to focus on include; know who you are employing, check qualifications, references and employment history. Ensure you have the right governance in place to prevent fraud, and adopt a sensible approach to procurement.
There are examples of schools across the UK having been charged up to ten times more than would otherwise have been paid for laptops and other IT equipment through mis‑sold lease agreements. Cases reported include a laptop that has a price of between £350 and £400 being charged at £3,750. Therefore put in place governance over financial agreements, cheque books, income from leasing halls or rooms, and what funds are spent on. Finally, ensure that revenue streams are monitored and keep a look-out for false invoices as this will help prevent procurement fraud, which is a big issue for educational establishments.