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Ian Buss

Beat the fraudsters

Ian Buss from Lloyds Bank Commercial discusses how academies could be vulnerable to fraud and steps to prevent it

Posted by Hannah Oakman | May 07, 2015 | Law, finance, HR

It may come as a surprise that academies often fall victim to fraud; however, the UK economy loses a substantial amount of money each year to this crime, and the education sector is just as prone as any other to people looking to exploit weaknesses.

As with all ‘businesses’, it’s essential that the proper controls and guidelines are put in place to protect academies from any potential vulnerabilities, and ensuring that processes are regularly challenged and brought up to date is a key way to reduce the risk of fraud.

The use of cheques to accept and make payments is still commonplace in many schools because it is an option often seen as easier to manage, given that more than one person is responsible for the preparation and authorisation of payments; however, it’s a fact that cheque payments often give something of a green light to potential fraudsters, leaving academies vulnerable to falling victim to scams that see cheques manipulated and even created fraudulently.

Academies with the ability to make BACS payments are well placed to consider removing the school cheque book altogether. Your bank should be able to guide and support the set-up, including ensuring multi-party authorities are in place, keeping the all-important requirement for more than one person to be involved with making payments.

Another factor to consider is that academies also rely heavily on the receipt of cash payments, such as dinner money or fees for school trips; however, this system sees money pass through many touch points, from the parent to the pupil to the teacher to the office, and so on.

While switching to cashless systems can seem like a major undertaking for academies, it’s something that’s certainly doable. It can significantly reduce the possibility of fraudulent activity whilst also removing the hugely time-consuming task of reconciling an almost constant flow of cash and cheques into the school.

Of course, the threat of fraud comes from many areas, and human vigilance is one of the most effective ways to prevent instances where money can be taken via dishonest means. For instance, if an academy receives a notification stating that a supplier’s bank account details have changed, it’s wise to introduce robust checks to ensure that the request is genuine.

One way to guarantee that this policy is adhered to is to use financial software that can ‘lock’ supplier bank account details, ensuring that only appointed administrators can change details and preventing junior staff members from making unauthorised alterations.

It’s an unfortunate fact that fraud does happen within academies, so it’s advisable for the senior leadership team to continue liaising with their auditors, solicitors and bank on a regular basis, helping to build understanding of how risks can be managed effectively.

Ian Buss is Head of Education at Lloyds Bank Commercial Banking: www.lloydsbank.com/business/home.asp

 

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