Shortages, Property Losses, and Fraud - Business Management Guide

This section is meant to inform you of your responsibilities in handling cash shortages, losses of equipment and other University property, and suspected fraud, waste, or abuse regarding University resources. Your primary responsibility is to report the situation to the proper authorities in a timely manner. These responsibilities are also described in the UT Code of Conduct, Policy HR0580.

When any such incident is discovered or suspected, you should determine whether an employee may be involved. Depending on the type of asset allegedly lost, the method of loss, and whether a University employee is involved, an investigation may be conducted by campus police, Audit and Compliance, or external organizations such as members of the state comptroller’s Division of Investigations.

University Policy FI0130 should be consulted if employee involvement is suspected; if employee involvement is not suspected, consult Policy FI0131.

Key Terms

A cash shortage is a theft or mysterious loss of University funds. For example, cash shortages may occur when revenue deposited is less than revenue actually received or recorded or when the petty cash on hand is less than the amount assigned to the department.

Property includes University equipment and supplies.

Fraud, waste, and abuse generally involve deliberate acts with the intention of obtaining an unauthorized benefit. Examples include theft or misappropriation of UT resources, improper and wasteful activity, unauthorized alteration or manipulation of computer files, forgery or alteration of documents, bribery or attempted bribery, authorizing or receiving compensation for hours not worked, etc.

Cash Shortages and Property Losses

Cash Shortages. Departments must report cash shortages of $250 or more and thefts in which a UT employee is suspected within 3 business days to Audit and Compliance and the campus/institute business office.

Cash and property losses. Cash and UT property losses resulting from theft, robbery or apparent burglary should be reported immediately to the campus/institute police department (or local police department and the campus/institute business office).

Fraud, Waste, and Abuse

As department head, you are responsible for reporting suspected fraud, waste, or abuse by employees, outside contractors, or vendors and all such allegations made to you. Information received regarding such activity shall be kept confidential under state law (court action could require disclosure). State law also prohibits discrimination or retaliation against employees who report allegations.

Reporting Fraud, Waste, and Abuse

You should make those in your department aware of the options for reporting suspected fraud, waste, or abuse. Employees, faculty, and students may report dishonest acts in the following ways:

To his or her supervisor or department head
To a campus/institute official
Directly to Audit and Compliance:
- System-wide Office……….865-974-6611
- Chattanooga…………………423-425-4532
- Memphis………………………901-448-1435
- Martin………………………….731-881-3100
UT Compliance Hotline: 855-461-2771 or tennessee.edu/hotline
State Audit Hotline: 1-800-232-5454 or apps.cot.tn.gov/ANTS

Note: Allegations may be made anonymously by reporting suspicions via the UT Compliance or State Audit hotline.

Reporting Shortages, Property Losses, and Suspected Fraud
Notify Audit and Compliance if:	Notify Campus (or Local) Police if:
A cash shortage of $250 or more has occurred.	A theft, robbery, or burglary has occurred.
A UT employee is suspected of fraud, waste, or abuse.	UT property is missing because of theft, robbery, or burglary. (Missing equipment should be reported on form T-64 and attached to the police report.)
A vendor, contractor, or other non-UT employee is suspected of dishonesty involving UT resources.

Warning: When circumstances warrant, employees who fail to report fraud, waste, or abuse or who knowingly make false accusations are subject to disciplinary action.

Employees who fail to cooperate with UT, state, or federal investigations of such activity are subject to disciplinary action, up to and including termination of employment.

Be Sure Before You Accuse

Before making allegations of dishonesty, employees should be reasonably certain of any claims. Such allegations can seriously and negatively impact the accused individual’s life and adversely affect the working environment of the department.

When Shortages, Property Losses, or Fraud Occur

You are required to do the following when shortages, property losses, or fraud occur:

Notify Audit and Compliance or campus (or local) police department to report a theft or unauthorized removal of University property.
Provide the auditors and/or security personnel access to departmental employees and records during investigations.
Help auditors and/or police secure departmental assets and records during investigations.
If appropriate, submit an Equipment Inventory Change/Deletion Request (Form T-64) to the Equipment Records section of the Controller’s Office after the investigation is completed (see Appendix).
Implement necessary procedures to reasonably protect University assets from future losses of a similar nature.
If applicable, cooperate with the campus/institute chief business officer, human resources office, chief financial officer, and general counsel’s office to:
- Determine and implement appropriate disciplinary action against employees.
- Ensure that general counsel or the chief financial officer pursues recovery of damages from theft or loss.

You should not do the following:

Conduct investigations to determine the total amount of assets lost or to identify responsible parties.
Alert the suspected individual(s) of an impending investigation.
Negotiate any settlement with employees who are suspected of theft.
Collect amounts owed to the University by employees as a result of theft.
Take any disciplinary action against an employee, other than suspension, before an investigation is complete.
Accept the resignation of any employee who is suspected of, under investigation for, or guilty of theft unless approved by the chief financial officer.

Your Role in Safeguarding Assets

Your responsibilities in safeguarding University assets include the following:

Create a culture of honesty and ethics in your department.
Ensure that the resources entrusted to the department are used ethically, prudently, and for their designated purpose.
Ensure that procedures are developed and maintained to safeguard University assets from fraud, theft, or abuse either by employees or outside parties, and develop an appropriate oversight process.
Ensure that procedures are developed and maintained for employees to identify when assets are lost and to report losses to their supervisors. Also, evaluate current processes and controls to ensure that adequate safeguards exist.
Report any of the following events to Audit and Compliance:

- One-time losses of University funds of $250 or more
- A suspicious pattern of losses less than $250
- Whenever an employee is suspected of fraud or theft of funds or property