McGrathNicol fraud risk management expert Graham Newton recently spoke with the Australian Financial Review’s education editor about the heightened risk of fraud facing Australia’s Higher Education sector.
According to Graham the annual operating revenue of some of Australia’s largest universities is close to 2 billion dollars, making them an attractive target for fraudsters. Additionally, these universities operate across diverse industries, in high risk markets and often manage sensitive information for research purposes. Some of the major challenges the sector faces include marketing to international students, cyber security and managing conflicts of interest.
Graham explains how the decentralised operations of universities and limited business experience of some Academics and university employees can mean there are many opportunities to override fraud controls. There is also heightened risk of employees taking up those opportunities in times of uncertainty and when resources are stretched. That means Australian universities face a heightened risk of fraud from internal threats as a result of cost cutting measures under the Government’s proposed Higher Education Reform Package.
Reduced resources place additional pressure on staff and can result in more cases of financial mismanagement and poor decisions by those with a sense of entitlement toward financial benefit because of how cost cutting impacts them personally.