MEMORANDUM

TO:       Faculty, Staff and StudentsFROM:     Doug Moore          Director, Risk ManagementDATE:     January 26, 1995

In order to stress the importance of the university's financial assets, to protect them from misappropriation, and to establish procedures for dealing with misappropriations should they occur, the following "Misappropriation of University Assets" policy was approved by the Business Affairs Advisory Committee on December 16, 1994. The policy applies to all university staff, faculty and students.

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MISAPPROPRIATION OF UNIVERSITY ASSETS

POLICY:

The assets of the university are critical to the accomplishment of its mission. Any unnecessary loss of assets is clearly detrimental to the university's best interests. It is the responsibility of every employee, regardless of rank or job title, to safeguard university assets. It is further the responsibility of every employee to report any suspected misappropriation of assets in accordance with the following procedure.

PURPOSE:

To inform employees of their responsibility to report known or suspected misappropriations of university assets; to establish a procedure for determining whether or not a misappropriation took place and its scope; to establish procedures for taking corrective actions to limit misappropriations and initiate control procedures to avoid future losses; to establish procedures for taking disciplinary actions and instituting criminal charges against employees who misappropriate assets; to establish procedures for recovering misappropriated assets; and to ensure that misappropriations are not excluded from insurance coverage because of prior knowledge of an employee(s) activities.Misappropriation is defined as unauthorized use of university assets by an employee which results in a financial loss to the university. Misappropriation can include theft, embezzlement, fraud and conflict of interest decisions.
Conflict of interest is defined as any transaction between the university and a business entity in which an employee or his/her family members have a substantial financial interest (5% or more), or any transaction in which an employee cannot be reasonably expected to exercise independence of judgment. (Note: The university has a separate Conflict of Interest Statement and Policy which should be consulted).

APPLICABLE TO:

All staff, faculty, casual and part-time employees, and students.

PROCEDURES:

Reporting

All university employees must report known or suspected misappropriations, regardless of magnitude, to their immediate supervisor, manager, or department head.
Departmental Management must in turn inform the Director of Internal Audit of possible misappropriations.
The Director of Internal Audit will report the suspected misappropriation to the Department of Public Safety and the Director of Risk Management.

Investigation

After being informed by a department of a misappropriation, the Director of Internal Audit will determine if any further action is needed. Further action will include but not be limited to:

• Conducting an investigation into the alleged misappropriation and/or
• Recommendations to tighten procedures to limit further losses.

If an investigation is warranted, the Internal Audit Department will conduct a preliminary review designed to:

• Verify if a misappropriation occurred and/or is still occurring
• Identify the person or persons responsible for the misappropriation
• Determine circumstances surrounding the misappropriation
• Determine dollar amount of loss.

If the preliminary review cannot substantiate that a misappropriation occurred, then any further investigation or action will be discontinued. Those persons who were initially reported to regarding the possible misappropriation will be informed of these findings.
If the preliminary review indicates that a misappropriation did occur, then the Internal Audit Department will continue its investigation and coordinate it with the Department of Public Safety and the General Counsel's Office.
Internal Audit's final report of the misappropriation should be forwarded to Departmental Management, General Counsel, Personnel Services, Risk Management, and Public Safety.
No department or individual should investigate a misappropriation on their own, or enter into any kind of discussion regarding settlement or restitution.

Disciplinary Action

When a misappropriation has been confirmed in writing from the Internal Audit Department, some disciplinary action must be taken. However, no personnel action can be taken without consultation with Personnel Services and/or the Office of General Counsel. Factors taken into consideration to determine what disciplinary action should be taken will be the size, scope and duration of the misappropriation. University policy #600, paragraph 6, entitled "Dishonesty," allows for immediate dismissal for acts of misappropriation. Lesser disciplinary actions should be determined in consultation with Personnel Services and/or the Office of General Counsel.
The university may initiate criminal proceedings regardless of the fiscal value of the misappropriation.

Financial Recovery

After receiving the final report from the Internal Audit Department, the Director of Risk Management will pursue an insurance recovery if appropriate. Risk Management will coordinate the submission of an insurance claim with other involved departments and individuals.
Restitution from the person(s) committing the misappropriation will be pursued, either on a voluntary basis or as the result of criminal prosecution.

Prevention of Future Misappropriations

The Internal Audit Department will make recommendations to improve departmental controls for preventing future losses. Departmental Management will institute these controls, and Internal Audit will do a follow-up review to ensure they've been implemented.

Documentation

Statistics regarding the number of misappropriations reported, and the dollar amounts involved, will be kept by the Internal Audit Department.