The ivy halls of academia aren't immune to the workplace fraud that plagues retailers and other businesses. Education is among the top five industries reporting instances of occupational fraud and is increasingly open to cybercrime. That was the message of James Gifas, head of RBS Citizens' treasury solutions, at a recent meeting of the Association of Independent Colleges and Universities of Massachusetts (AICUM). Gifas said workplace fraud on campuses shows similar traits to those in the corporate world. Most fraud takes place with the help of school employees, sometimes as a partner in crime, but often as an unsuspecting foil. Just as hackers look for vulnerabilities in network security, they prey on people who may unwittingly reveal a password and other credentials that enable fraudulent entry into the college's computer system. In addition, detection is difficult in the complexity of a full-scale campus with housing, dining and colleges activities as well as academic programs. Another area of concern is the the risk of cybercrime as electronic payments are increasingly used in college communities, from the vendors who supply goods to campuses to payments for tuition. "More and more of colleges' vendors are asking to be paid via wire and ACH and the upside is ease-of-use, speed, and greater visibility," Gifas told the AICUM. "The downside of these tools is that bank account information and wire instructions are being exchanged more frequently, so it's more critical than ever to safeguard these transactions." Side Effects
The fallout from increased fraud in educational settings takes several forms. As college budgets tighten to keep student costs down, most can't afford to lose the estimated 5 to 7 percent in lost revenue that the Association of Certified Fraud Examiners has uncovered in many industries. In addition to hurting the bottom line, fraud can damage the reputation of a university and hamper its recruitment of students, faculty and donors. Gifas pointed out that while electronic payments are gaining momentum, a recent study by the Association of Financial Professionals showed as many as 85 percent of organizations also continue to experience significant check fraud. He advocated a layered approach to thwart hackers and fraud schemers recommended by the Association of Certified Examiners. The association stresses the importance of doing background checks on employees, having a policy that outlines acceptable behavior when workers represent the company - including any mention of the business on social networks – and stepping up anti-fraud training for both managers and workers.