Monday, 8 August 2011

Fraud in the HE sector

I was reading this report on fraud prevention in the HE sector on the train into work this morning. It suggests that up to £1 billion could be lost to UKHE through fraud each year, and that institutions typically have limited technical capability and a weak culture of fraud prevention. The Higher covered it here, and Paul Greatrix has some rather sniffy comment here (which kind of demonstrates what they were saying about a weak culture of fraud prevention, given that Paul is a very senior manager at a very large and prestigious university, and therefore represents the absolute cutting edge in HE management thinking).

There are obvious reasons to be sniffy. The report is a pretty basic piece of work unashamedly produced by anti-fraud professionals to drum up business. Even they don't really believe the £1 billion figure - notice how it is prominent in the press release, but not actually in the report at all...

But considered as an upper bound, I don't find the figure particularly incredible. I've now worked in four institutions, and come across fraudulent practices in all of them. If you look not just at departmental administrators dipping their fingers in the petty cash, but also at student loan fraud, research grants, fraudulent data returns to HEFCE, and all the other kinds of fraud out there then you can see that the number will start to add up. Then there are those more questionable things - I've personally seen many examples of university (middle and senior) managers procuring goods and services from their friends and business contacts without even the most basic market testing required by Financial Regulations. I've no reason to think that there was out-and-out corruption involved, but sometimes the excessive price paid does make you wonder.

Of course not all these frauds cost individual universities money - and some may even gain money for the institutions that don't get caught. You can see why it is hard for institutional leaders to have a really strong anti-fraud approach when they are more-or-less consciously cheating HEFCE on their data returns.

Things have improved. When I worked at HEFCE, we always ascribed financial irregularities on the part of institutions to incompetence, whatever the evidence might indicate to the contrary. That isn't the case any longer and HEFCE at least now undertakes more rigorous audit. Still, I think there is a lot of room to improve. If I were a senior leader, I would stick my hand in my pocket for the £4,450 (plus VAT) for my fraud resilience check - at least after I had tested this price against the market, I would.

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