In the movie, Pirates of the Caribbean, The Curse of the Black Pearl, the main character, Jack Sparrow, was asked by a Royal Marine what his purpose was for being in Port Royal, to which Sparrow truthfully responded, “I confess, it is my intention to commandeer one of these ships, pick up a crew in Tortuga, raid, pillage, plunder and otherwise pilfer my weasely black guts out.”

In the real world, determining a person’s intention to commit theft/fraud isn’t usually that easy. In fact, when fraud is committed, activities usually go on for a long time (an average of 24 months, according to the Association of Fraud Examiners).

Take for example  a news report about a former Kentucky county official who was indicted on two felony charges alleging that he misappropriated about $25,000 over two years while in office.  The former official used funds from a drug investigation account for other purposes, used a county credit card for personal purchases and filed requests to be reimbursed for expenses that the county had already paid. The personal expenses ranged from food and alcohol to a subscription to a dating website.

According to the report, the accused said while under oath, “Basically, I lost track of things and misappropriated it.”

The news report never states how authorities figured it out, but in UKIA’s experience, it’s usually about documentation, or lack thereof. In fact, when purchase and travel request forms are used consistently and require the business purpose to be stated, the risk of misappropriation of funds occurring is greatly reduced. Although fraud is rare, documentation errors do occur, and both can be costly as a result of inappropriate and inaccurate reimbursements.  Requiring purchase and travel forms to be completed that outline the business purpose for each request discourages such occurrences while also making it easier for faculty and staff to track and separate personal and business expenses.  In turn, these best practices ultimately help to monitor and validate expenses.   

Want to know more about how UKIA can help you locate gaps in your processes that leave an opening for inappropriate activities? Let us help you improve your operations BEFORE something happens. Call us at 257-3126, or check out UKIA’s services here. OR, if you just need some tools or training to make what you already have in place more efficient and effective, the UK Purchasing Division offers a number of resources here.

The Parable of the Three Stone Cutters shares the perspectives of three laborers on their work.

Three stonecutters were busy cutting a block of stone when a traveler approached them. Interested to find out what they were working on, he asked the first stonecutter what he was doing. “I am cutting a stone!” Still perplexed, the traveler asked the second stonecutter the same question. “I am cutting this block of stone to fit perfectly in a wall.” Only slightly more clear about the structure the stonecutters were working on, the traveler then turned to the third stonecutter, who seemed to be the happiest of the three. In response to the traveler’s eager question, the third stonecutter replied: “I am building a cathedral.”

The third stonecutter saw the big picture.

Here at the University of Kentucky, we all play a role in building on the University’s Big Picture – the goals for improving people’s lives through education, research, creative work and health care, and enhancing the economic viability of our state.

UK Internal Audit (UKIA) recently restructured its organization to better align with the University’s goals by going beyond the financial and operational details to convey how these issues – the exceptions we find during our audits –  fit into “the big picture” for UK, taking into account the emerging risks here on campus and at universities across the nation.

Through this restructuring, we are working to maximize the productivity and expertise of each UKIA member to enhance effectiveness. Dovetailed with this endeavor are building relationships and improving communication to allow for more focus on work product value.

Early results already demonstrate added value to UKIA clients and the University as a whole in the form of better risk mitigation, more timely and insightful reporting, and enhanced actuation and effectiveness of the audits.

These changes also mean greater opportunities to conduct overarching surveys that will provide insights into challenges prevalent across the University – insights we can use to create tools and guidelines that alleviate risk while continuing to enhance efficiency.

 

To better encapsulate what these changes mean for the University, UKIA revised its mission statement for the first time in eight years:  

UKIA’s Mission Statement

“To support UK in its pursuit of excellence by providing expert analyses and advice

to champion the achievement of management objectives.”

If you would like to find out more about your area’s identified risk or improving your area’s processes to mitigate these risks, call us at 257-3126 or visit our website.

Many of us across the University wear multiple hats on a regular basis to ensure that the work gets done. But a recent article in the Lexington Herald-Leader revealed how that may not always be a good thing. The article was about a former executive with a real estate firm who admitted to stealing more than $1 million from its subsidiaries. How did he do it?

Because he was in the position to create accounts, accept checks, and make deposits, he was able to create false bank accounts with similar names as the real ones, request payments be sent directly to him, and divert those funds into these false bank accounts.

While it is unlikely that a lack of separation of duties would always amount to a fraud of this magnitude, one of UK Internal Audit’s (UKIA) priorities is to help the various units here at the University avoid the pitfalls that allow such situations to occur. In nearly every audit, we have identified inadequate separation of duties. Simply put, this is when the same person is responsible for multiple steps within a given activity.

We understand that many units are small and “wearing multiple hats” as is often necessary. And that may be true. But there are ways to mitigate the risks in those situations, too.

UKIA can work with you to help you determine when “wearing more than one hat” is ok – and when it is inappropriate. We can also help your unit establish proper duty separation protocols and/or implement suitable monitoring activities.

Want more information about how we can help your unit? Call us at 257-3126, or check out UKIA’s services here.

Earlier this year, I came across a report about a company in Virginia that was forced to completely shut down following a catastrophic fire in its processing facility. The 75-year-old company was one of the biggest employers in its county, but because they failed to put in place a business continuity plan, dozens of people are out of a job.

One month later, another report came out about a similar company. Another fire. No continuity plan. And 70 more people are now without a job indefinitely.

UKIA’s role within the University is to identify risk – and help to mitigate it. As we are conducting reviews in various units around campus and across the state, we see how hard you work every day to make this University the best it can be.  We help you find ways to make operations more efficient and ensure that things like money and data are properly secured. In so doing, we learn a lot about the plans you are making, the processes you have in place – and those you don’t.  One of the most common missing links is a Business Continuity Plan.

It’s also one of the most important.

According to the University of Kentucky Hazard Mitigation Plan 2016, the primary risks we face on UK’s Lexington campus stem from natural hazards – severe storms, flooding, fires, tornados and even earthquakes – all of which could one day prevent us from accessing our places of work. But with careful planning, the inability to get to work does not have to mean the inability to work.

That’s where a Business Continuity Plan comes in.

Does your unit need to develop one?  The UK Division of Crisis Management & Preparedness has some great tools and templates on its website to help you assess your unit’s unique vulnerabilities and begin developing a plan.  By investing just a little time, you can rest assured knowing that the continuity and recovery preparedness plan you develop will help you maintain your unit’s productivity, protect the University and safeguard the livelihoods of those in your unit.

Visit the UK Crisis Management & Preparedness website to get started.