H3. Fraud

i. Each supervisor shall become aware of what can go wrong in their area of authority.
ii. Each supervisor shall put into place and maintain effective monitoring, review, and control procedures that will prevent acts of wrongdoing.
iii. Each supervisor shall put into place and maintain effective monitoring, review, and control procedures that will promptly detect acts of wrongdoing, should prevention efforts fail.
Accountability for the effectiveness of these responsibilities cannot be delegated, and shall remain with the supervisors and managers.

H.3.02 Fraud Definition:
The System prohibits fraud and financial impropriety, as defined below, in the actions of its trustees, employees, vendors, contractors, consultants, volunteers, and others seeking or maintaining a business relationship with the System.
Fraud and financial impropriety shall include, but not be limited to:
i. Forgery or alteration of a check, bank draft or other financial document or account belonging to the college System;
ii. Falsifying time sheets, expense reports or other report documents;
iii. Misappropriation of funds, securities, supplies, or other assets;
iv. Impropriety in handling or reporting of money or financial transactions;
v. Profiting as a result of insider knowledge of System activities;
vi. Disclosing confidential or proprietary information to outside parties;
vii. Accepting or seeking anything of material value from vendors or persons providing services/material to LSCS, with the exception of a perishable gift less than $50 in value intended for a group of employees;
viii. Destruction or disappearance of records, furniture, fixtures, or equipment; and
ix. Any similar or related irregularity.

H.3.03 Investigation Responsibilities:
The internal audit department is responsible for the initial investigation and shall promptly notify the Location Executive Officer (LEO), General Counsel, and the Vice Chancellor for Business Affairs/Chief Financial Officer of the initiation of the review.  If any person who would otherwise be notified is a fact witness in the investigation, he or she shall not be involved in the administrative oversight or reporting of the investigation.  Once a factual investigation establishes fraud, the System’s General Counsel and Chief Financial Officer shall communicate it to the Chancellor, and the Chancellor, in turn, shall communicate the findings to the Audit Committee of the Board.
Decisions to prosecute or to turn the matter over to law enforcement authorities and/or regulatory agencies for independent investigation, and all final decisions regarding the disposition of the case, shall be made by the Chancellor, in consultation with the Board of Trustees. 
Decisions regarding the continuing employment of persons who are involved in, or who failed to take appropriate action to protect against dishonest or fraudulent conduct, shall be made in accordance with Board Policies regarding discipline and discharge.

H.3.04 Non-Retaliation:
Any employee or student who reports suspected fraudulent activity, in good faith, shall be protected against any retaliation for making such a report.  The reporting member of the campus community shall refrain from confrontation with the suspect, further examination of the incident, or further discussion of the incident with anyone other than the employee’s or student’s supervisor or others involved in the resulting review or investigation.  Persons found to be making frivolous claims under this Policy will be disciplined, up to and including discharge of employment for an employee, or expulsion from the System for a student.

H.3.05 Confidentiality:
The Director of Internal Audit may accept and initiate an investigation, on a confidential basis, from an LSCS employee or student who suspects dishonest or fraudulent activity. Results of investigations conducted by the internal audit department shall be disclosed to and discussed with only those persons associated with LSCS who have a legitimate need to know in the performance of their job duties and responsibilities.

LSCS Policy Manual Section adopted by the Board of Trustees on August 7, 2008