Snitch. Stool-pigeon. Tattle-tale. These are some of the derogatory terms used to describe a “whistleblower”. With such negative connotations associated with it, it is a wonder anyone would come forward to report suspicious activity. However, as you will see, it takes a hero. This article will describe the advantages of implementing a fraud reporting hotline within your organization.

A fraud reporting hotline can be used to report occupa-tional fraud, waste, and abuse, quality control concerns, workplace complaints, health and safety violations, contrac-tor or vendor fraud and process improvement suggestions.

Implementing a fraud hotline in your organization doesn’t have to be daunting. It can be as simple as setting up a website or a phone number and monitoring it internally, or you may choose to subcontract with a third party, such

as an independent certified fraud examiner to operate and monitor the hotline for you. It should be advertised throughout your organization on posters, on your website, through training, or included in employee pay stubs. It is critical that upper management not only support the hotline, but openly encourage employees to participate.

An effective fraud hotline will have several methods for employees to come forward, anonymously if they so choose. A website and a toll-free phone number are the most common methods, but you can also have a dedicated e-mail address, regular U.S. mail, or in-person reporting methods.

Finally, the hotline is meaningless unless tips are acted upon. A systematic method for assigning follow-up and maintaining a database of tips received and actions taken is a good idea. Implementing an effective anti-fraud program in your organization is more important than ever, and a fraud hotline is a great way to start.

For more informationon how you can get started today, contact Jeff Nigroat 951.698.8783.

Calling All HeroesBy Jeff Nigro, CPA, CFE

We all need heroes. Not everyone can don a cape like Batman, dodge speeding bullets like Superman, or fly around buildings like Spiderman. It has been said that courage is not the absence of fear, it is the conquering of fear. And courage is all it takes to be a hero. Some-times, courage means doing the right thing, even when you know it won’t be the easy thing.

NIGRO & NIGRO A Professional Accountancy Corporation25090 Jefferson Ave., Murrieta, CA 92562 • 951.698.8783 • www.nncpas.com

Did You Know...• Nearly 50% of all corporate fraud in America was detected by a tip from an employee within the organization.• The median fraud loss for an organization with a fraud hotline was nearly $150,000 less than in organizations without a fraud hotline!• Potential fraudsters may think twice if they know their fellow employees are watching• A fraud hotline is an effective way to demonstrate that upper management takes its fiduciary responsibilities seriously.• Sarbanes-Oxley requires companies to implement some type of fraud report mechanism, like a hotline.

E X P E R T AC C O U N T I N G /AU D I T N E W S A N D I N F O R M AT I O N F O R YO U R F I S CA L S U C C E S S | J U N E 2 0 1 1

Student Fees. What is Allowable?By Jeff Nigro, CPA, CFE

A lawsuit was filed recently against the State of California alleging that many public schools are charging illegal fees to students for participation in educational activities. As stated in the California Code of Regulations, “A pupil enrolled in a school shall not be required to pay any fee, deposit, or other charge not specifically authorized by law.”

In response to this lawsuit, Doe, et al. v. State of California, et al., Case No. BC445151, the State has indicated that review of student fees will be added to the State Audit Guide. This means that in the very near future, your auditors will be looking at fees charged by your District and determining whether or not they were allowable. Below are some common questions regarding allowable fees.

Is it legal to charge fees for transportation?

Transportation to and from school is not considered an educational activity and therefore, fees may be charged for this service. However, there are some exceptions when transportation fees may not be charged. Transpor-tation for extra curricular activities and transportation for disabled students and students of parents or guardians that are needy must be provided free of charge. In addition, the sum of state aid for home to school trans-portation and fees collected from parents may not exceed the actual operating costs of the program. (No profit may be earned from this program).

Can the District require deposits for textbooks or other instructional supplies?

Charging a deposit to guarantee that District property is returned and is maintained in good condition is unallow-able even if the deposit is refundable. However, the law permits a District to require proper care and usage of property loaned to a student. The parent or guardian of any minor who willfully cuts, defaces, or otherwise damages property belonging to a school district will be liable for all damages caused by the minor as allowed by

Education Code 48904. The liability of the parent or guardian shall not exceed $10,000. If the student or parent cannot pay for the repairs, a voluntary work program may be established for the minor in lieu of monetary payment.

Is it allowable to charge fees for classes such as wood shop, sewing, or home economics?

It is not allowable to charge a general fee for taking a shop class. All students should be able to make the same items, regardless of whether or not they have the money to do so. If a student wishes to take home an item they made during class, the District may sell that item to them for the cost of materials. If the student does not wish to keep the item, the District cannot charge the student or penalize them in any way. In addition, no fees may be charged for food that is eaten in a home economics class that was prepared as part of the course work.

TIP: We recommend that you review board policies along with the fees your District is currently charging. Also, keep in mind that if any board policies are in disagreement with the law, the law always takes precedence. If there are any concerns about any fees being charged, District legal council or the District’s auditors should be consulted.

©2011 Nigro & Nigro • This publication is intended to present an overview of current accounting trends; no article should be construed as representing advice on specific, individual accounting matters, but rather as general commentary on the subject discussed. Articles may be reprinted with permission. For more information visit our website at www.nncpas.com.

Your questions and comments are always welcome. PH: (951) 698-8783 EMail: jnigro@nncpas.comOr visit us online at www.nncpas.com

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