Reducing fraud in the education sector
Information to help schools, colleges and independent training providers manage the risk of fraud.
Applies to England
Introduction
This guide will help schools, colleges and independent training providers to:
- reduce the risk of fraud or financial irregularity
- deal with fraud within their organisation, should it occur
- report fraud, theft or irregularity
- be aware of and manage cybercrime risks
Types of fraud
Fraud is deception carried out to gain an unfair advantage or to disadvantage another. It may involve the:
- misuse of funds or other resources
- supply of false information
Common types of fraud in the education sector include:
- theft
- fictitious and falsification of invoices
- credit card and mandate fraud
Cybercrime and cyber security
Organisations should be vigilant and proactive in relation to cybercrime and have cyber security arrangements in place.
Read cyber security standards for schools and colleges to understand the standards your organisation should meet.
Create a fraud risk management strategy
Annex 4.9 of the HM Treasury publication Managing Public Money highlights the responsibilities and expectations of public sector organisations in relation to fraud.
An effective fraud risk management strategy involves:
- assessing your overall vulnerability to fraud
- testing your internal control system to ensure it is robust
- identifying the areas most vulnerable to fraud risk – the list of potential fraud red flags may support this review
- evaluating the scale of fraud risk
- responding to the fraud risk through improved control arrangements
- measuring the effectiveness of the risk strategy to potential fraud
- reporting fraud
The most effective way to manage the risk of fraud is prevention. You can reduce your risk by:
- having a robust fraud risk management plan in place
- developing an anti-fraud culture
Create a fraud response plan
An organisation’s response to fraud risk should be proportionate to the risks it faces. Typically, it will involve:
- developing a fraud policy statement, a fraud risk strategy and a fraud response plan – every organisation should have these documents
- developing and promoting an anti-fraud culture through:
- clearly stating a commitment to ethical behaviour
- promoting awareness of fraud
- recruitment screening
- regular training
- maintaining good staff morale
- clarifying roles and responsibilities for the overall and specific management of fraud risk
- establishing cost-effective internal systems of control to prevent and detect fraud
- confirming contacts and routes for staff to report suspicions of fraud, including developing a whistleblowing policy
- responding quickly and effectively to fraud when it arises
- establishing systems and processes for investigations into allegations of fraud
- using your internal audit function to advise on fraud risk, where appropriate, and drawing on their experience to strengthen controls
- continually evaluating the effectiveness of anti-fraud measures in reducing fraud
It’s good practice to measure the effectiveness of actions taken to reduce the risk of fraud. You can obtain assurance measures from:
- internal audit
- stewardship reporting
- control risk self-assessment
- monitoring activity
Make a report
Follow the Report fraud or financial irregularity process to make a report.