1. Incentive and pressure to perpetrate fraud existed in the VBSD’s management. Every year, the school got limited aid to provide educational service and they also needed to report their performance to the School Board members so they get the pressure to perform well in order to get aid. Within the budget restriction, they may not able to perform the projects that could improve the school performance. Therefore, the Superintendent intentionally committed fraud by executing the unbudgeted project without approval. Also, Superintendent understood the surplus fund will return to City and he believed it is better to spend all the fund. Therefore, he got the incentive to insist on overestimating federal aid to prevent surplus fund. Also, the School
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Although there had been a reporting and authorization procedure that was required by the board, no one was really following it because the board did not really enforce it enough. As a result, a practice of not following guidelines became a tradition in the VBSD’s management. Also, the Superintendent and CFO had an overly optimistic attitude toward the school district’s performance when in reality it was not doing well. And they misguided the board with this false projection. For example, even though a school board member predicted a possible deficit for the year, the CFO advised the group to expect a 2.8 million surplus in the fiscal year 2004-2005. The board’s blind reliance on the CFO’s projection also caused other employees to think that the board is okay with the unethical behaviors of the superintendent and CFO. It also caused the superintendent and CFO to rationalize their dishonest act of continuing their …show more content…
The VBSD administration’s unreliable financial reporting would be considered both an error and fraud. There were mathematical errors in the few budget estimates, clerical errors in bookkeeping such as that the same funds had multiple commitments and a mathematical and typographical error of $2.5 million in the budget, usage of wrong data, and miscalculations in the ADM numbers that were used for state and federal aid. In CFO Robertson’s case, he violated the School Board policy regarding the approval of transfers for anything over $10,000. Robertson committed the fraud when he made 21 transfers that were not approved by the school board and automatically approved Spigot’s bills without even looking into them. Superintendent Spigot also committed fraud as he was hiding unbudgeted spending from the school board that he used the school funding to personally negotiate a contract with KleanKommand as well as purchasing Calliope hall. The several unbudgeted projects that Spigot committed before the Purchasing Department had the chance to study the proposal, was later all turned down by the departments. Moreover, he intentionally ignored the internal auditor’s reports and recommendations and did not bring them up to the board. He almost completely disregarded the reporting process. In addition, he fabricated some numbers on the budgets and the financial statements to “fulfill” his unrealistic and untrue projections that there would be “surplus” when in fact the VBSD was not
Although there had been a reporting and authorization procedure that was required by the board, no one was really following it because the board did not really enforce it enough. As a result, a practice of not following guidelines became a tradition in the VBSD’s management. Also, the Superintendent and CFO had an overly optimistic attitude toward the school district’s performance when in reality it was not doing well. And they misguided the board with this false projection. For example, even though a school board member predicted a possible deficit for the year, the CFO advised the group to expect a 2.8 million surplus in the fiscal year 2004-2005. The board’s blind reliance on the CFO’s projection also caused other employees to think that the board is okay with the unethical behaviors of the superintendent and CFO. It also caused the superintendent and CFO to rationalize their dishonest act of continuing their …show more content…
The VBSD administration’s unreliable financial reporting would be considered both an error and fraud. There were mathematical errors in the few budget estimates, clerical errors in bookkeeping such as that the same funds had multiple commitments and a mathematical and typographical error of $2.5 million in the budget, usage of wrong data, and miscalculations in the ADM numbers that were used for state and federal aid. In CFO Robertson’s case, he violated the School Board policy regarding the approval of transfers for anything over $10,000. Robertson committed the fraud when he made 21 transfers that were not approved by the school board and automatically approved Spigot’s bills without even looking into them. Superintendent Spigot also committed fraud as he was hiding unbudgeted spending from the school board that he used the school funding to personally negotiate a contract with KleanKommand as well as purchasing Calliope hall. The several unbudgeted projects that Spigot committed before the Purchasing Department had the chance to study the proposal, was later all turned down by the departments. Moreover, he intentionally ignored the internal auditor’s reports and recommendations and did not bring them up to the board. He almost completely disregarded the reporting process. In addition, he fabricated some numbers on the budgets and the financial statements to “fulfill” his unrealistic and untrue projections that there would be “surplus” when in fact the VBSD was not