Fraud and Fiscal Misconduct

Scope

All Indiana University units and employees.

This policy applies to all Indiana University units and Members of the University Community.

In the event of a conflict, this policy shall supersede all campus, school and college, program, department, center, institute, and unit policies on any core or regional campuses of Indiana University.

Back to top

Policy Statement

1. If an employee engages in fiscal misconduct, disciplinary action will be imposed in accordance with respective personnel policies for academic appointees or Staff and Part Time employees. Such disciplinary action may include termination from Indiana University. Final disciplinary action taken will be determined by the Vice President or Chancellor of the affected area, in collaboration with Internal Audit, the Office of the University Controller, the Office of the Vice President and General Counsel, and IU Human Resources (IU HR) (for Staff or Part Time employees) or the campus chief official for academic affairs (for academic appointees).
2. If any employee knows or suspects that another university employee or employees are engaged in fiscal misconduct, it is that employee’s  responsibility to immediately notify Internal Audit and the Responsibility Center (RC) fiscal officer. If the RC fiscal officer is involved in the suspected fiscal misconduct or if the employee has concerns about informing the RC fiscal officer, then the employee should contact the campus financial administration office and Internal Audit.
3. Any employee who has knowledge of fiscal misconduct by another employee and does not report such to university officials may be subject to disciplinary action, up to and including termination from Indiana University.

It is the policy of Indiana University to fully investigate all instances of fraud and fiscal misconduct. All Members of the University Community must promptly report any known or suspected fraud and fiscal misconduct through the Indiana University Anonymous Reporting Hotline or directly to Internal Audit.  

All Members of the University Community are required to cooperate fully with those performing an investigation into possible fraud and fiscal misconduct. Individuals who suspect fraud or fiscal misconduct must not attempt to investigate on their own.  

Back to top

Reason for Policy

To establish the consequences of fiscal misconduct and the proper reporting mechanisms to be used for notification of known or suspected fiscal misconduct.

To assist all Members of the University Community in recognizing fraud and fiscal misconduct, to encourage individuals to report known or suspected fraud or fiscal misconduct, and to provide a coordinated approach for review and resolution.  

The university follows the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework which defines fraud as any intentional act or omission designed to deceive others resulting in a loss. The COSO framework helps organizations design and implement a system of strong internal controls, enterprise risk management, and fraud deterrence. 

The university is subject to annual external audits of its financial activities. These audits are conducted in accordance with Generally Accepted Auditing Standards and Government Auditing Standards to provide reasonable assurance to detect a material misstatement when it exists, including those that may result from fraud or fiscal misconduct. Fraud may involve collusion, forgery, intentional omission, misrepresentations, or the override of internal controls.  

Back to top

Procedures

1. Internal Audit will have primary responsibility for investigating allegations of fiscal misconduct. Where appropriate, the Office of the University Controller and the campus chief officer for financial administration will be involved to provide expertise.
2. The RC fiscal officer or  Internal Audit  shall notify the appropriate university administrators or campus financial administration office and a representative from the Office of the University Controller and IU HR .
3. All investigations of allegations of fiscal misconduct will be conducted in the strictest of confidence. To the extent permitted by law and university policy, Whistleblower Protection, the names of individuals communicating information will not be revealed, unless the allegations are determined to be malicious in nature.

Back to top

Definitions

Fiscal Misconduct: a) An activity or set of activities that lead to the intentional spending of university resources that are not approved; b) inappropriate use of university resources including assets and personnel; c) knowingly violating university financial policies; d) manipulation of university data and documentation to allow spending where funds do not exist; or e) intentionally misreporting university transactions.

Campus Financial Administration: Financial administrators at the campus level responsible for the budgetary and fiscal affairs of the campus. For purposes of this policy, University Administration (UA) is considered a campus, and the University Controller serves in the role of the senior financial administrator for UA.

Fraud – any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain, financial or otherwise. 

Fiscal Misconduct: is an act or failure to act regarding a fiscal matter, contrary to law, rule, or university policy, which results in loss or other damage to the University.  

Fraud and Fiscal misconduct examples include, but are not limited to: 

• Embezzlement, theft, or misappropriation of university funds, goods, property (including intellectual property), services, systems, or other resources. 

• Forgery or unauthorized alteration of financial documents or records. 

• Improper handling or reporting of financial transactions. 

• Intentional disregard for university fiscal policy and procedure.  

• Authorizing or receiving the following:  
  • Compensation for goods not received or services not performed.  
  • Compensation for hours not worked, including falsifying timesheets or other payroll records.  
  • Reimbursement for expenses not incurred or reimbursement for expenses not incurred for University purposes. 

Members of the University Community:  Any individual who is a student, staff, part time employee, academic appointee, university official, or any other individual employed by, or acting on behalf of, the university; other individuals while on Indiana University property, including employees of third-party vendors and contractors, volunteers, and visitors.

Back to top

Sanctions

Potentially criminal activity must also be reported to the IU Police Department. Internal Audit is charged with the investigation of all fraud and fiscal misconduct investigations, and coordinates with other offices depending on the nature of the incident reported (e.g. IUPD, UCO, Research Administration, etc.). 

Retaliation against anyone who has made a good-faith report of wrongful conduct, provided information, or participated in an investigation into a good-faith report of wrongful conduct is prohibited by the university’s Whistleblower Protection policy. An individual who makes a false allegation of fiscal misconduct with the intent to disrupt university business or to cause harm to another individual may be subject to disciplinary action.  

The University may take disciplinary action, pursuant to existing university policies and collective bargaining agreements, against any employee who commits fraud or fiscal misconduct. Criminal charges may also be brought against a university employee who commits certain acts of fraud or fiscal misconduct.  

Back to top

Additional Contacts

Back to top

History

FIN-ACC-30 History

This policy was established on May 1, 1992, and was updated on March 1, 2005, and August 26, 2021.

FIN-ACC-35 History

The fraud policy was established on October 27, 2011, and the fiscal misconduct policy was established on May 1, 1992.Each were updated on March 1, 2005, and August 26, 2021, respectively.Effective X, these two separate policies have been combined into one comprehensive policy. 

Back to top