Vol. 5, Iss.
5 No Child Left Behind Financial Compliance Insider®
Model Policy
Teach your employees how to report suspected fraud
According to the National Association of Certified
Fraud Examiners, audits reveal less than one-third of the
discovered cases of fraud or embezzlement. Instead, tips
from colleagues and business associates, and accidental
discovery of anomalies in documents or behavior lead to
investigations in more than half of all prosecuted fraud
and embezzlement cases. So it’s important to develop a
policy encouraging employees to report their suspicions of
financial malfeasance.
Fraud detection and reporting policy
I. Statement of Principle
The Board of Education expects all officers, employees
and contractors of the school district to fulfill the public’s
trust and to conduct themselves in an honorable manner,
abiding by all applicable laws and regulations and all district
policies and regulations.
II. Wrongdoing Defined
When district officers, employees or contractors know or
have reasonable cause to suspect a wrongful action on
the part of an officer, employee, vendor or contractor of
the school district, he must report such information. Such
reportable wrongful action includes:
•  Theft of district money, property or resources.
•  Misuse of authority for personal gain or other non-district
purpose, including unauthorized disclosure of confidential
or proprietary information to outside parties, and profiteer-
ing as a result of insider knowledge of district’s activities
or plans.
•  Fraud, corruption, conflicts of interest, or abuse by an-
other employee relating to his office, including accepting
or soliciting anything of material value from contractors,
vendors or others providing services to the district.
•  Violations of applicable federal, state and local laws or
regulations.
•  Serious violations of district policy, regulations and/or
procedures.
III. Reporting Wrongdoing
District officers, employees or contractors must report
knowledge of, or reasonable suspicions of, wrongdoing to
[insert appropriate reporting entity — include one or more
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Here is a model fraud reporting policy, based on
policies adopted by districts across the country. Some
states have laws that may affect your fraud reporting
policy; for example, some states require districts to
have anonymous reporting through a hotline. So you
can adapt this policy to suit your district’s needs, but be
sure to consult your SEA, attorney and auditor before
doing so. And remember, these policies are subject to
school board approval. n
non-district officials, e.g. the superintendent of schools,
president of the school board, Office of Internal Audit, state
comptroller, or law enforcement, as appropriate].
IV. Investigation
Upon receiving a credible report of alleged wrongful con-
duct, the school district shall take prompt steps to conduct
an investigation. The board shall approve the engagement
of special counsel, independent auditors, or other outside
contractors, as appropriate in the circumstances, to assist
in the investigation. Criminal authorities shall be informed
if a crime is suspected.
V. Disclosure
Knowledge of the investigation will be limited until it is
complete, to avoid alerting the target that an investigation
is underway. When the investigation is final, the investigator
shall prepare, and the board shall adopt, a written report
of the allegation and investigation and its results. In the
event that no evidence of wrongdoing is uncovered, the
report may remain confidential.
VI. Whistleblower Protection
No person acting on behalf of the board or the superin-
tendent may:
•  Dismiss, or threaten to dismiss.
•  Discipline, suspend, or threaten to discipline or sus-
pend.
•  Impose any penalty upon.
•  Or intimidate or harass any employee, officer or contractor
of the district in retaliation for any action taken in good faith
and in accordance with the requirements of this policy. n