Related Policies and Guidelines

TBR Policy 4:01:05:50 Preventing and Reporting Fraud, Waste or Abuse

TBR Guideline B-080 Reporting and Resolution of Institutional Losses

Administrators at all levels of management should be aware of the risks and exposures inherent in their areas of responsibility and should establish and maintain proper internal controls to provide for the security and accountability of state resources, including resources entrusted to them. Resources,” as used herein, shall refer to supplies, personnel, equipment, real property, intellectual property, data, and financial resources.

The procedure for reporting property losses to the appropriate officials is divided into three categories: (1) losses due to cash shortages, (2) losses involving acknowledged or suspected misconduct, and (3) losses of physical property. The Tennessee Board of Regents reports the suspected fraud items and cash shortages to the Comptroller of the State of Tennessee, Division of State Audit, and the property losses to the State of Tennessee, Department of Treasury, Risk Management Division. Losses must be reported to the State immediately upon discovery.

Losses of institutional assets as the result of acknowledged or suspected misconduct by either an employee or a non-employee may include, but are not limited to, shortages of cash; lost, stolen, or altered checks; operational supplies; physical property; intellectual property; and any other instance where assets may have been misappropriated, e.g., travel claim abuse, long distance telephone abuse, reporting or approval of hours not worked, etc. In such instances, the Tennessee Board of Regents must be verbally notified of the incident followed by a written notification.

Individuals involved with suspected fraudulent activity or misconduct must assist with and cooperate in any authorized investigation, including providing complete, factual responses to questions and either providing access to or turning over relevant documentation immediately upon request by any authorized person. Any person refusing to provide such assistance must be notified that such refusal may result in the imposition of discipline, up to and including termination. Failure to provide such notice will not preclude the institution from terminating the employee. The procedures outlined below should be followed:

1. Any employee who becomes aware of losses involving misconduct or suspected fraud must immediately report the incident to an appropriate department official. If the incident involves their immediate supervisor, the employee must report the incident to the next highest-level supervisor. Employees should not confront the individual being investigated or initiate an investigation on their own. Such actions could compromise the investigation. A department official who receives notice of suspected misconduct or fraudulent activity must immediately report the incident to the following:
   1. Chief Financial Officer
   2. Director of Police and Safety (as deemed necessary) 
2. The Chief Financial Officer will notify the Tennessee Board of Regents regarding the acknowledged or suspected fraud or misconduct.
   For each reportable situation, Northeast State will complete a Notification of Loss Report” or Property Loss Report.” The investigation unit identified on the notification report will file a Case Resolution Report” at the conclusion of the investigation.
   Each required report should be submitted to the following:
   1. Internal Audit Director
   2. Office of Police and Safety
   3. TBR Vice Chancellor for Business and Finance
   4. TBR Director of System-wide Internal Audit 
3. The Tennessee Board of Regents will evaluate the information provided and make a determination concerning external reporting obligations, if any, and the feasibility of pursuing available legal remedies against persons or entities involved in misconduct or fraudulent acts against the institution. Remedies include, but are not limited to, terminating employment, requiring restitution, and forwarding information regarding the suspected fraud to appropriate external authorities for criminal prosecution. In those cases where disciplinary action is warranted, the Tennessee Board of Regent’s office of Personnel/Human Resources, office of General Counsel, and other appropriate offices shall be consulted prior to taking such action, and applicable institutional and Board policies related to imposition of employee discipline shall be observed.
   
   An employee suspected of theft of institutional property may not resign as an alternative to discharge after the investigation has been completed. Exceptions to the requirement can only be made by the president and require advance consultation with and approval by the vice chancellor for Business and Finance. If the employee resigns during the investigation, the employment records must reflect the situation as of the date of the resignation and the outcome of the investigation.
   
   An employee who is dismissed for gross misconduct or who resigns to avoid dismissal for gross misconduct shall not be entitled to any payment for accrued but unused annual leave at the time of dismissal.
   
   Students found to have participated in misconduct or fraudulent acts as defined by this guideline will be subject to disciplinary action pursuant to Northeast State’s Student Conduct and Disciplinary Sanctions policy as outlined in the Student Handbook. The Assistant Vice President for Enrollment Services will be responsible for adhering to applicable due process procedures and administering appropriate disciplinary actions.
   
   All investigations will be conducted in as strict confidence as possible, with information sharing limited to persons on a need to know” basis. The identities of persons communicating information or otherwise involved in an investigation or allegation of misconduct or fraudulent activity will be revealed beyond the institution and the Tennessee Board of Regents Legal and Business Office staff only as necessary to comply with reporting requirements or state law or if legal action is taken.
   
   Administrators at all levels of management must implement, maintain, and evaluate an effective compliance program to prevent and detect fraudulent activities. Once fraud has been reported, the overall resolution should include an assessment of how it occurred, an evaluation of what could prevent recurrences of the same or similar conduct, and implementation of appropriate controls, if needed.