How Do You Stop School Credit Card Fraud?

Annie Yoder | October 9th, 2012

Is your school struggling with declining funding? If so, you’re probably worried about the top line. You’re closely watching what’s coming in. You’re exploring ways to generate revenue. But, you need to be equally worried about what’s going out.

Credit cards are one of the most common ways for funds to escape your district. This type of fraud is particularly destructive because it tends to be long-term, continuous and difficult to spot. Employee fraud is like a hole in a bucket – no matter how much water you add, slowly but surely, the water level keeps going down. However, if you understand where fraud may be taking place, you can take steps to deter it.

Keep Your Finances Water Tight

Credit cards are convenient, but less than honest employees can take advantage of lax policies and procedures. As you use credit cards for more and more purchases, it is imperative to properly monitor usage.

The following are a few potential credit card schemes you’ll want to watch out for:

  • Gas purchases for employees who are reimbursed mileage on their expense report
  • Meals for non-district employees
  • Purchases of goods or services that are not for proper public purpose or district use
  • Cash advances
  • Unapproved gift card purchases
  • Alcohol purchases

Check for Leaks

Credit card fraud is perpetrated in two ways: on district cards and on employees’ personal cards. In the first, employees charge personal expenses to district credit cards, hoping that they won’t stand out on statements. In the second, employees make personal expenses on their own cards and then submit those expenses to the district for reimbursement. This is also called expense reimbursement fraud.

To prevent credit card fraud, you need to seal up the areas where it’s most likely to occur. Solid policies and procedures can help you prevent and catch fraud. And be sure to communicate them to everyone who deals with district finances.

By implementing some best practices, you can help prevent fraud from occurring. Share the following with accounts payable staff as well as managers who may approve requisitions or purchase orders:

  • Implement written policies and procedures; require employees to read and sign them.
  • Limit access to and the number of district credit cards.
  • Require detailed receipts.
  • Consider using purchasing cards (p-cards) vs. typical credit cards. P-cards allow management to limit where purchases can be made, credit limits, etc.
  • Reconcile credit card bills on a monthly basis.

Combat the Rising Tide

As a school official, you know that your funding continues to decline and pay increases have been slashed or even eliminated. These factors impact your employees’ personal finances and morale. They also inherently increase the risk of fraud occurring in your district.

While you need to pay attention to the top line, keep an eye on the bottom, too. No one wants to believe that employees would steal from them, but the truth is that it does happen…every day. You can reduce the odds of it occurring though by implementing strong policies and effective checks and balances. You have the power to prevent leaking coffers and protect district funds.

Contact our Government Fraud Prevention Professionals

Worried that your school could be at risk for credit card fraud? Want to improve your accounts payable processes and internal controls, but don’t know where to start? Contact Rea & Associates. Our audit team will help you to put the processes that you need in place and protect your district’s bottom line. Our certified fraud examiners will identify processes that need improvement, helping you to enhance your school’s fraud prevention and detection systems.

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