Discussion Draft

									March 19, 2013

TO:		Members of the Board of Trustees

FROM	:	Nancy L. Zimpher, Chancellor

SUBJECT:	Fraud and Irregularities Policy and Procedure


Action Requested
	
	The proposed resolution adopts a State University fraud and irregularities policy and indicates Board support for related revised implementing procedures.

Draft Resolution for Discussion

I recommend that the Board of Trustees adopt the following resolution:

Whereas the State University is committed to upholding the highest standard of honest behavior, ethical conduct and fiduciary responsibility in its operations;  and seeks to prevent, detect and diligently pursue instances of fraud and irregularities relating to its activities; and

Whereas in November 1993 SUNY developed and implemented Procedures for Suspected Fraud or Irregular Activities; and 

Whereas staff has now updated the procedures to reflect the current process, and to clarify the types of activities covered and the steps related to reviewing complaints and allegations; now, therefore, be it

Resolved that the policy entitled “Fraud and Irregularities,” attached hereto (copies on file in the Office of the Secretary of the University), be, and the same hereby is, approved; and, be it further  

Resolved that the Board supports the changes made to the Procedures for Suspected Fraud or Irregular Activities.



Background  

      SUNY has had a fraud procedure since November 1993; however, SUNY does not have a fraud or whistleblower policy. Many universities and colleges have a fraud or whistleblower policy statement, and it is a good corporate governance practice for such a policy to be adopted by the Board. Such a policy would help to set the tone of the organization and its commitment to honest behavior, ethical conduct, and fiduciary responsibility for SUNY funds, resources, and property. 
      
      In support of the fraud procedure, SUNY has in place ancillary supporting procedures which include communicating to SUNY employees the importance of internal controls and employees’ related responsibilities; maintaining a System Administration fraud hotline for reporting fraud and irregularities; outlining a process for reporting and reviewing complaints; establishing a committee to review complaints and take action as appropriate; maintaining a code of conduct; reporting certain matters to the Audit Committee of the SUNY Board of Trustees; and maintaining an internal audit function.  
      
   Significant proposed changes to SUNY’s fraud procedure include:
   
1. Title change to clarify that the procedure includes reporting and reviewing.
2. Requirement for campuses to establish a fraud hotline.
3. Definition of the “types of activities covered.”
4. Clarification of the types of activities that are covered under other policies/procedures such as complaints of sexual harassment.
5. Clarification on where and how to file a complaint or allegation.
6. The Office of University Controller is added as a member of the Fraud Committee.
7. Clarification of the steps related to reviewing complaints and allegations.
      As part of the revised fraud procedure, System Administration and each campus shall identify a campus officer to whom suspected or detected fraud and irregularities must be reported. In addition, System Administration and each campus shall establish an easily accessible mechanism (fraud hotline) such as a toll free number, e-mail address, or facsimile number that individuals can use to report suspected or detected fraud and irregularities. Furthermore, campuses are required to report any suspected or detected fraud to the Office of the University Auditor at System Administration. 


Policy Title:
Fraud and Irregularities

Summary

The State University of New York (SUNY) is committed to upholding the highest standard of honest behavior, ethical conduct, and fiduciary responsibility with respect to SUNY funds, resources, and property. As such, SUNY seeks to prevent and detect any fraud or irregularities and will diligently pursue any instance that involves SUNY-related activities or business.  

Policy

It is the policy of SUNY that all members of the SUNY community:

* comply with all SUNY, New York State, and federal laws, regulations, policies and procedures; 
* practice honesty and integrity in fulfilling their responsibilities; 
* observe high standards of business and personal ethics in the conduct of their duties and responsibilities; 
* help ensure the prevention and detection of fraud and irregularities; 
* be familiar with the types of fraud and irregularities that might occur in their area;
* be alert for any indication that fraud or irregularities might exist in their area; and
* promptly report any known or suspected fraud or irregularities involving SUNY or affiliated entity funds, resources, property, or employees.

It is the policy of SUNY that employees and individuals who lawfully report suspected fraud, waste, or abuse shall not suffer discharge, demotion, suspension, threats, harassment, discrimination, or other form of retaliation for making such reports.


Definitions

Fraud and irregularities include activities that are (1) a misappropriation of assets; (2) in violation of or non-compliant with any SUNY, New York State, or federal law, regulation, policy or procedure; (3) economically wasteful; (4) an indication of gross misconduct or incompetency; or (5) an unethical, improper, or dishonest act.

Related Procedures 

Procedure for Reporting and Reviewing Fraud and Irregularities

Related Authority 
New York State Labor Law § 740 (whistleblower protection)
New York State Civil Service Law § 75-b (whistle blower protection)
New York State Executive Law Article 4-A § 55 (reporting to Inspector General)
New York State Finance Law § 8 (duties of the State Comptroller)
New York State Public Officer’s Law §73, §73a, and §74 (business related activities, financial disclosure, and code of ethics)
History
Memorandum to Presidents from the Senior Vice Chancellor, dated November, 1993, establishing protocol with regard to fraud investigations and audits that affect SUNY.
Procedure for Suspected Fraud or Irregular Activities dated December 5, 1997 (currently being updated).
There is no previous policy.

Procedure Title:
Reporting and Reviewing Fraud and Irregularities

Summary 

These procedures set forth the State University of New York’s (SUNY) procedures for reporting and reviewing suspected or detected fraud and irregularities. These procedures apply to any fraud and irregularities involving SUNY employees, officers or trustees, and campus-related entities, as well as vendors, consultants, contractors, funding sources, or any other parties with a relationship with SUNY. All complaints will be reviewed objectively and without regard to the suspected individual’s length of service, position, title, or relationship with SUNY. 

Process 

I. 	General

		A. 	Applicability of These Procedures

These procedures cover activities at SUNY State-operated and statutory campuses, auxiliary services corporations, alumni associations, student associations and governments, campus foundations, and other campus-related entities. 

      B. 	Responsibility
      
All members of the SUNY community are expected to promptly report any known or suspected fraud and irregularities. System Administration and each campus should identify a campus officer to whom suspected or detected fraud and irregularities must be reported. In addition, campuses should establish a mechanism (fraud hotline) such as a toll free number, e-mail address, or facsimile number that individuals can use to report suspected and detected fraud and irregularities. The fraud hotline should be readily accessible and provide the option of reporting anonymously.  Campuses are further required to report any suspected or detected fraud to the Office of the University Auditor at System Administration using Form A. 

		C. 	Types of Activities Covered

For the purpose of these procedures, fraud and irregularities includes activities that are (1) a misappropriation of assets; (2) in violation of or non-compliant with any SUNY, New York State, or federal law, regulation, policy or procedure; (3) economically wasteful; (4) an indication of gross misconduct or incompetency; or (5) an unethical, improper, or dishonest act. Examples of improprieties include, but are not limited to, the following:

* Theft of any State or SUNY asset including, but not limited to money, tangible property, trade secrets or intellectual property;
* Misappropriation, misapplication, destruction, removal, or concealment of State or SUNY property;
* Inappropriate use of computer systems, including hacking and software piracy;
* Unauthorized disclosure of confidential or proprietary information;
* Unauthorized disclosure of student educational records, personal information, or medical information;
* Authorizing or receiving compensation for hours not worked or covered by appropriate and available leave;
* Fraudulent or otherwise deceptive financial reporting;
* Credit card and travel expense fraud;
* Use of staff to perform personal errands, services or tasks;
* Alteration or falsification of documents;
* False claims by students, employees, vendors, or others associated with SUNY; and
* Bribery, kickbacks, bid rigging, and conflicts of interest.

	D. 	Activities Covered Under Other Policies and Protocols

Activities described above that may constitute fraud or irregularities may also be covered by existing policies and procedures on specialized topics.  Such activities may still be reported under this policy, but will be referred for handling to the extent such other procedures exist.  Examples of such policies include:

* Individual employee grievances and complaints concerning terms and conditions of employment will continue to be reviewed in accordance with applicable academic and human resources policies and collective bargaining agreements. 

* Complaints regarding sexual harassment and unlawful discrimination on the basis of race, color, national origin, religion, age, sex, sexual orientation, disability, veteran or marital status should be reported to the designated officer and handled in accordance with the applicable complaint procedures.  

* Student academic grievances should follow local campus policies and procedures. 

* Complaints regarding research administration are generally the responsibility of the Research Foundation for SUNY. 

* Complaints related to construction projects administered by the State University Construction Fund (SUCF) or the Dormitory Authority of the State of New York (DASNY) are generally the responsibilities of those entities.

* Complaints related to a SUNY community college should be filed with the appropriate community college.


II. 	Process for Reporting Detected or Suspected Fraud and Irregularities

A. Individual Reporting Process

All members of the SUNY community are expected to report any known or suspected fraud or irregularities. Generally, an individual may discuss the concern directly with a supervisor; however, if the individual is not comfortable speaking with the supervisor, the individual is not satisfied with the supervisor’s response, or the individual does not have a supervisor (such as a trustee or student), the individual may report the concern to the campus’ designated officer, any campus fraud hotline, or SUNY’s fraud hotline. 

Individuals who want to report suspected fraud or irregularities directly to SUNY System Administration may utilize the fraud hotline maintained by the Office of the University Auditor. These individuals may report in the following ways:

Website: 		http://www.suny.edu/UniversityAuditor/reportFraud.cfm
Email: 		university.audit@suny.edu
Fax: 		(518) 320-1564
Voice mail: 	(518) 320-1539
Mail: 		University Auditor, State University Plaza, 
   Albany, NY 12246

Individuals have the option of either providing contact information or reporting the information anonymously. While not required, providing contact information will enable the reviewer to contact the individual to clarify the information being provided. At a minimum, individuals should provide key information such as a description of the incident; individual(s) involved; and financial loss, if any. When requested, SUNY will make every effort to handle all information received confidentially, to the extent permitted by law. Consistent with New York State laws, employees or other persons who lawfully report suspected improprieties shall not suffer discharge, demotion, suspension, threats, harassment, discrimination, or other retaliation as a result of making such report.

B. System Administration and Campus Reporting Process

The designated campus officer should forward a report to the Office of the University Auditor when sufficient facts and circumstances exist to create a reasonable suspicion that a fraud or irregularity has occurred, or where a review of the incident has commenced. The report should include key information such as a description of the incident; individual(s) involved; financial loss, if any; and applicable rules, regulations, and procedures (see Form A – Fraud Incident Report). The Campus should also report to the Office of the University Auditor any contact from the New York State Attorney General, the Inspector General, or any other outside agency regarding any investigation.


III. 	Process for Reviewing Detected or Suspected Improprieties

      A. 	Initial Review and Determination of Appropriate Action

Each fraud incident report, as well as any relevant communication received through the fraud hotline (or other method), will be reviewed by the SUNY Fraud Committee (Committee). The Committee is coordinated by the Office of the University Auditor and includes representation from several offices within System Administration. The specific roles of each office on the Committee are as follows:

1. Office of the University Auditor: the University Auditor chairs the Committee and coordinates overall case screening and management. The University Auditor will also provide expertise on financial matters, including accounting and administrative controls, and will coordinate work with the campus-based internal audit departments. The University Auditor acts as the liaison to the Office of the New York State Inspector General.

2. SUNY Counsel: SUNY Counsel provides advice on legal matters and serves as liaison between SUNY and external agencies such as the Attorney General and district attorneys. SUNY Counsel will also provide input regarding the Public Officers Law, Ethics in Government Act, Executive Law Article 4-A, and other laws and regulations.

3. Employee Relations: Employee Relations provides technical expertise regarding the various responsibilities and obligations that may be applicable in each case under the pertinent collective bargaining agreements. In particular, Employee Relations will provide specific information regarding interactions with bargaining unit employees and their representatives on matters such as disciplinary actions, interrogations, and notices of discipline. Employee Relations acts as liaison to campus human resource and employee relations offices.

4. University Police: University Police assists in the fraud investigation by utilizing its contacts with campus police and public safety departments, local police, other law enforcement agencies, and merchants to gather pertinent information. University Police will also provide suggested criminal investigation procedures and, when necessary, obtain assistance from campus police and public safety departments and external law enforcement agencies.

5. University Controller: the University Controller provides expertise related to financial matters, including accounting and administrative controls. The University Controller works closely with the campus’ internal control officers.

The Committee will review each report or complaint to determine what action, if any, should be taken. These actions include (1) contacting the campus or complainant for additional information, (2) initiating a review into the matter, or (3) referring the matter to an outside agency such the New York State Attorney General or Inspector General. Reviews may be conducted individually or jointly by the Office of the University Auditor, campus internal audit departments, campus staff, or externally, by an independent auditor, consultant, other State agency or an outside law enforcement agency. Generally, appropriate campus personnel will be involved in the reviews relating to campus activities. 

      B.	Review Process

The objectives of the review are to verify the information provided, determine responsibility, identify improvement opportunities, and determine if the matter warrants reporting to the appropriate law enforcement agency. The review process may include interviewing the individual filing the complaint (unless the individual chooses to remain anonymous), campus employees, System Administration officials, and others, as appropriate; reviewing documentation submitted with the complaint; obtaining and reviewing other relevant documentation; and reviewing applicable laws, rules, regulations, and policies. Every effort will be made to maintain confidentiality throughout the investigation to the extent permitted by law; however, it cannot be guaranteed.

      C.	Resolution

Upon SUNY’s completion of its review, a determination will be made as to whether the review has resulted in sufficient evidence to show a violation of law, regulation, policy or procedure; or fraud or irregularities may have occurred. If the results of the review rise to the level of sufficient evidence, the results may be forwarded to a law enforcement agency for further action, as appropriate. University Counsel will work with the campus, when appropriate, to take the necessary steps to make a referral to the appropriate entity (local district attorney, Office of the Attorney General, Inspector General, etc.).  Disciplinary procedures, if any, are initiated by the chief administrative officer, or designee, at each campus. Such disciplinary actions should be initiated in consultation with the Office of Employee Relations.

The Committee will report the matter, as appropriate, to the Office of the New York State Inspector General, in accordance with New York State Executive Law Article 4-A, Section 55, and the Office of the New York State Comptroller, in accordance with Volume XI, Section 7.0200 of the New York State Accounting System User Procedure Manual. The Office of the University Auditor will periodically provide reports to the Audit Committee of the SUNY Board of Trustees regarding the number of reports and complaints, results of any reviews, and a description of those matters that resulted in known fraud or irregularities.


The affected campus will be informed of the results of the review and any decisions and recommendations made by the Committee. In addition, any improvement opportunities related to policies, procedures, or control activities that were identified during the review will be shared with appropriate campus officials.

Forms 

Form A - Fraud Incident Report

Fraud Hotline - http://www.suny.edu/UniversityAuditor/reportFraud.cfm

Research Foundation Fraud Hotline - https://www.compliance-helpline.com/rfsuny.jsp

Related Procedures 

Procedures for Reporting Thefts/Losses

Discrimination Complaint Procedure

Other Related Information 

SUNY Policy on Fraud and Irregularities (currently being considered)

Related Authority 

New York State Labor Law § 740 (whistleblower protection)

New York State Civil Service Law § 75-b (whistle blower protection)

New York State Executive Law Article 4-A § 55 (reporting to Inspector General)

New York State Finance Law § 8 (duties of the State Comptroller)

New York State Public Officer’s Law §73, §73a, and §74 (business related activities, financial disclosure, and code of ethics)

New York State Accounting User Procedures Manual, Volume XI, Section 7.0200 (reporting to the State Comptroller)

Memorandum to Presidents from the Senior Vice Chancellor, dated November 22, 1993 

History 

Memorandum to Presidents from the Senior Vice Chancellor, dated November 22, 1993, establishing protocol with regard to fraud investigations and audits that affect SUNY. 

Procedure Document No. 9001 – Procedure for Suspected Fraud or Irregular Activities

Appendices 

There are no appendices relevant to this procedure.
Board Resolution				-2-			March 19, 2013




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