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Bradford College Fraud
Bradford College has several sites and employs hundreds of teaching staff. The college has recently discovered a serious fraud involving false billings for part-time teaching. The fraud involved two members of staff. Noel is a clerk in the payroll office who is responsible for processing payments to part-time teaching staff. Ruth is the Head of the Business Studies department at the college campus.
Part-time lecturers are required to complete a monthly claim form that lists the classes taught and the total hours claimed. These forms must be signed by their Head of Department, who sends all signed forms to Noel. Noel checks that the class codes on the claim forms are valid, that hours have been budgeted for those classes, and inputs the information into the college’s payroll package.
The college has a separate personnel department that is responsible for maintaining all personnel files. Additions to the payroll must be made by a supervisor in the personnel office. The payroll package is programmed to reject any claims for payment to employees whose personnel files are not present in the system. Noel had gained access to the personnel department supervisor’s office by asking the college security officer for the loan of a passkey because he had forgotten the key to his own office.
Noel knew that the office would be unoccupied that day because the supervisor was attending a wedding. He logged onto the supervisor’s computer terminal by guessing her password, which turned out to be the registration number of the supervisor’s car. Noel then added a fictitious part-time employee, who was allocated to the Bradford Campus Business Studies department. After that activity, Ruth began making claims on behalf of the fictitious staff member and submitting them to Noel.
Noel signed off the forms and entered them as normal. The claims resulted in a steady series of payments to a bank account that had been opened by Ruth. The proceeds of the fraud were shared equally between Noel and Ruth. The fraud was only discovered when the college wrote to every member of staff with a formal invitation to the college’s centenary celebration. The letter addressed to the fictitious lecturer was returned as undeliverable and the personnel department became suspicious when they tried to contact this person in order to update his personal details. By then Noel and Ruth had been claiming for non-existent teaching for three years.
The government department responsible for funding the college conducted an investigation and concluded that the college’s management had relied excessively on the application, controls programmed into administrative software and had paid too little attention to the human resources aspects of the system
a) Evaluate the difficulties associated with preventing and detecting this
fraud.
b) Advise the college on the weaknesses in its systems and procedures.
c) Discuss the suggestion that the human elements of
frequently more important than the software elements in ensuring that
records are correct
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