What is Fraud and Financial Misconduct?

Definition of Fraud
Fraud and Financial Misconduct Reporting
Examples of Reportable Activities
Safe Disclosure
Responsible Conduct of Research

DEFINITION OF FRAUD

Fraud encompasses a wide range of irregularities and illegal acts characterized by intentional deception or misrepresentation. The Institute of Internal Auditors’ defines fraud as: 'Any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; or to secure personal or business advantage.'

Misconduct is another word raised when discussing fraud. Misconduct is broader and includes violating internal University policies and ethical standards.

The Association of Certified Fraud Examiners categorizes fraud into the following three categories:

Asset misappropriation - Schemes in which an employee steals or misuses the organization's resources. Some of the types of asset misappropriation schemes are:

  • Skimming - collecting cash receipts from customers and not recording them.
  • Expense reimbursement - personal or nonexistent items being claimed on expense claims.
  • Payroll manipulations - claims for hours worked, pay rate adjustment, adding non-existent employees to the payroll.
  • Cash misappropriation - stealing from the cash register or petty cash.
  • Non-cash misappropriation - theft, misuse or personal use of the organization's property (inventory, equipment and supplies).

Corruption - Corruption involves the misuse of influence in a business transaction in a way that violates duty to the employer in order to gain direct or indirect benefit. It could include bribery, conflicts of interest, receipt of kickbacks or gratuities, bid rigging, and aiding and abetting fraud by other parties.

Financial statement fraud - Financial statement fraud involves intentional manipulation of financial statements, which can lead to inappropriately reported revenue, expenses or balance sheet amounts, or concealing misappropriation of assets.

FRAUD AND FINANCIAL MISCONDUCT REPORTING

The University of Manitoba values accountability and integrity and desires to protect its funds and property owned by, or in the care of the University, from fraud and financial misconduct.

Faculty, staff, students and the wider University community can discreetly express their concerns of alleged fraud and financial misconduct including concerns of violations of University financial policies, to Audit Services. Concerns should be in good faith, and not frivolous or vexatious. Financial Services is also available to respond to questions regarding the purpose and context of financial related policies.

Generally, individuals should first contact their immediate supervisor or University faculty or unit contact to discuss concerns in a timely manner after becoming aware of the activity or concern. This is an important step as there may be clarifying information that supervisors or others are aware of that may immediately resolve the concern. If someone does not feel comfortable communicating concerns to these individuals, then one may contact Audit Services.

Audit Services will evaluate the individual’s concerns to determine if an investigation is required. The individual reporting the issue may be contacted to obtain additional information to help complete the investigation. Information received by Audit Services will be treated in a confidential and sensitive manner. Audit Services staff work in compliance with the Institute of Internal Auditors Code of Ethics which requires that "Internal auditors respect the value of information they receive and do not disclose information without appropriate authority unless there is a legal or professional obligation to do so". As such, audit staff strive to protect the confidentiality and identities of all individuals providing any information to them. Reports will be accepted anonymously, but it should be understood that this may limit our ability to respond and investigate.

Audit Services may determine that the concerns reported would be better addressed under the Safe Disclosure Policy or the Responsible Conduct of Research Policy. These policies protect those who are filing reports from reprisal and have specific investigation procedures and timelines. Audit Services will provide guidance and support for filing reports on alleged fraud and financial misconduct under these policies if determined necessary.   

To report concerns of fraud and financial misconduct to Audit Services, please visit the Report Fraud and Financial Misconduct webpage. We will provide confirmation that the concern has been received, is under review and an approximate date when it is to be resolved.

EXAMPLES OF REPORTABLE ACTIVITIES

  • Theft or misappropriation of University property
  • Unauthorized use of University property for personal advantage or gain
  • Altering or deliberately recording incorrect financial information for either a personal or University advantage
  • Any claim for reimbursement of expenses that were not incurred for the benefit of the University or for which the individual had already received reimbursement
  • Purchasing personal items on the University purchasing card or through a travel and business expense claim (except in exceptional/emergency cases, when the purchase is reimbursed to the University)
  • Bribery or kickbacks
  • Undisclosed conflict of interest (a situation in which the private financial or personal interests of a person or related party compromise or have the appearance of compromising the person's independence and objectivity of judgment in the performance of his or her obligations to the University, including teaching, research and service activities.) Conflicts of interest can be potential, actual or perceived (see U of M Conflict of Interest Policy).
  • Authorizing or receiving payments for goods not received or services not performed
  • Authorizing or receiving payments for hours not worked including fraudulent overtime claims
  • Forgery or falsification of any document, such as cheques, timesheets, requisitions, accounting records
  • Any other activity that deliberately disregards University policies, internal controls or is perceived to be contrary to the ethical values of the University

SAFE DISCLOSURE

The University of Manitoba has been designated a “government body” under the Regulations to The Public Interest Disclosure (Whistleblower Protection) Act. All government bodies are required to implement Procedures to manage disclosures, as defined by the Act.

The University’s Safe Disclosure (Whistleblower) Policy was implemented in 2012 to meet the requirements of the Act. The Policy is intended to apply only to the Disclosure of Wrongdoing, as that term is defined in the Act and may be amended from time to time. The Policy establishes a Designated Officer to receive complaints, and provides for protection from reprisal. This Policy is not intended to apply to other types of disclosures, and is not intended as a dispute resolution mechanism to replace grievances, appeal hearings, and other administrative processes. At the time this Policy was approved, the definition of Wrongdoing was:

a) An act or omission constituting an offence under an Act of the Legislature or the Parliament of Canada, or a regulation made under an Act;

b) An act or omission that creates a substantial and specific danger to the life, health or safety of persons, or to the environment, other than a danger that is inherent in the performance of the duties or functions of an employee;

c) Gross mismanagement, including of public funds or a public asset;

d) Knowingly directing or counseling a person to commit a wrongdoing described in clauses (a) to (c);

To make a report directly to the Designated Officer under the Safe Disclosure Policy, contact the Office of the Vice-President (Administration) at 204-474-8889 or vpadmin@umanitoba.ca

RESPONSIBLE CONDUCT OF RESEARCH

The Responsible Conduct of Research Policy states that the University wishes to ensure the highest standards of integrity in all Research associated with the University. The associated Responsible Conduct of Research – Investigation Procedure  provides examples of many types of breaches – including article (xi) Mismanagement of Grants or Award Funds. The procedure sets out specific investigative procedures, including the appointment of a Designated Officer to receive reports, investigation committee members, reporting requirements and timelines and it provides protection from reprisal.

To make a report directly to the Designated Officer under the Responsible Conduct of Research Policy, contact the Office of the Vice-President (Research and International) at 204-474-6915 or research_communications@umanitoba.ca