FRAUD, EMBEZZLEMENT, THEFT, FINANCIAL
CONFLICTS OF INTEREST

No: S-26

Date: October 1988-Rev.(3)
(Original, December 12, 1974)

Authority: UW System Administration
                  Financial Policy & Procedure #16


I. Background

Acts of embezzlement and theft and financial conflicts of interest can and do occur in any organization, including a large and decentralized system of universities. These acts carry legal implications for the university employee both as an employee and as a citizen under the criminal law. Concern for a university's fiscal integrity must also be matched by concern for just and fair treatment of offenders. For this reason, the choice is not simply between discipline or discharge on the one hand and criminal prosecution on the other. If a university employee is found to be or suspected of being, engaged in financial misconduct, the employee's supervisors cannot select restitution, discipline or discharge as exclusive alternatives to referral for criminal prosecution. In some instances, discipline or discharge and referral for criminal prosecution will be indicated because of the magnitude of the wrongdoing, its aggravated nature, or other factors. In others, discipline or discharge of the employee will be a sufficient response to the situation. A determination as to the appropriate course of action in any given case can be made only after thorough inquiry into the facts and circumstances and consultation with the university and UW System administration.

For these reasons, the following procedures should be followed in the case of suspected or actual of embezzlement, theft or financial conflict of interest.

II. Procedures

A.   As soon as there is any indication of actual or suspected fraud, forgery, embezzlement, falsification of documents, theft of cash or property, misuse
      of funds, or other financial irregularity, the following steps should be taken:

    1. The discovering party or his/her supervisor should immediately report the incident to the University Police Department.

    2. Upon receipt of any such matter, the police will immediately notify the director of internal audit.

    3. The director of internal audit will notify the assistant chancellor for administrative affairs and the UW-System internal audit director. They will determine whose assistance is required (e.g., UWM legal counsel, and/or UW-System internal audit, legal counsel, and/or the State of Wisconsin Department of Justice, etc.)

B.   The department head, in consultation with the investigating department (e.g., police, internal audit), should take immediate action to prevent further
       losses (e.g., reassignment of duties, suspension, or discharge depending upon the circumstances). The Department of Human Resources should be
       contacted for advice with respect to possible action against an employee.

C.   Upon conclusion of the investigation:

  1. The UWM Police Department, as the chancellor's designated representative, will determine whether prosecution is appropriate and proceed accordingly. Officers will consult with the UW-System Department of Internal Audit and other legal authorities deemed necessary.

  2. The UWM Internal Audit Department will issue a report which may include recommendations to improve operational procedures and internal controls. They will also report to the UW System vice president for business and finance and the UW System internal audit director.

  3. The department head should administer appropriate disciplinary action to the employee after consulting with the Department of Human Resources and the applicable dean or division head.

These procedures do not preclude use of the "Whistleblower Law."