5.24 Fraud, Waste and Abuse

5.24.1 Objective #

To provide policies on fraud, waste and abuse regarding University of Tennessee Foundation (UTFI) resources and to establish reporting requirements for illegal, improper, wasteful, or fraudulent activity regarding UTFI resources.

5.24.2 General Policies #

1. This policy applies to (l) staff, (2) contractors and vendors while conducting UTFI business and (3) others who use UTFI resources or information with or without authorization. UTFI will investigate all allegations of fraud, waste or abuse by internal or external parties. Any employee of UTFI found to be involved in fraud, waste, or abuse as defined in this policy is subject to disciplinary action, up to and including termination, and criminal prosecution when warranted.
2. UTFI will consult with the state Comptroller’s Office to determine if the University of Tennessee Audit and Consulting Services or UTFI’s external auditor will investigate suspected acts of fraud, waste, and abuse by employees. If warranted, an investigation will be conducted and written report issued. The report will be sent to appropriate UTFI officials for administrative action, with copies to the UTFI Finance and Audit committee, Chief Financial Officer (CFO), legal counsel, human resources, and the state Comptroller.
3. UTFI employees are responsible for ensuring that resources entrusted to them by UTFI are used ethically, prudently, and for their designated purpose. Employees with managerial or supervisory duties are responsible for creating an environment that encourages integrity and deters dishonest behavior. UTFI employees, contractors or vendors, and others who use UTFI resources or information are responsible for reporting fraud, waste, or abuse regarding UTFI resources, whether by members of the UTFI community or outside parties. When circumstances warrant, employees who fail to report fraud, waste, or abuse are subject to disciplinary action. Employees who knowingly make false accusations are also subject to disciplinary action.
4. When fraud, waste, or abuse is known or suspected, management should determine whether an employee may be involved.
5. All employees have a duty to cooperate with UTFI and/or state or federal investigations of fraud, waste, and abuse. Failure to cooperate may result in disciplinary action, up to and including termination of employment.

5.24.3 Definition of Fraud, Waste, and Abuse #

1. Fraud, waste, and abuse, for the purpose of this policy, include illegal, improper, wasteful, or fraudulent activities regarding UTFI resources. Examples include, but are not limited to:
   • Theft or misappropriation of funds, supplies, property, or other resources
   • Improper and wasteful use of resources
   • Forgery or alteration of documents
   • Bribery or attempted bribery
   • Unauthorized use of records
   • Unauthorized alteration or manipulation of computer files
   • Unauthorized use of logos, trademarks, copyrights, etc.
   • Falsification of reports to management or external agencies
   • Pursuit of a benefit or advantage in violation of UTFI’s conflict of interests policy
   • Improper handling or reporting of financial transactions
   • Authorizing or receiving compensation for goods not received or services not performed
   • Authorizing or receiving compensation for hours not worked
   • Willful violation of laws, regulations, or contractual obligations when conducting UTFI business
   • Falsification or unauthorized alteration of time or leave records.

5.24.4 Reporting Fraud, Waste or Abuse Involving University Employees #

1. Employee Reporting Requirements. Employees should report suspected fraud, waste and abuse regarding UTFI resources to their supervisor, the CFO, the UTFI President and CEO (President), the University of Tennessee internal audit department (Audit and Consulting Services, 865-974-6611), or the State of Tennessee hotline (1-800-232-5454). Employees who suspect or detect such activity shall not initiate investigations on their own nor alert the suspected individual(s) of an impending investigation.
2. Departmental and Other Management Reporting Requirements. Upon receipt of a report of suspected fraud, waste or abuse, any supervisor, the CFO or the President must immediately relay the report to the Chair of the UTFI Finance and Audit Committee and may also relay the report to the University of Tennessee internal audit department (Audit and Consulting Services, 865-974-6611), or State of Tennessee hotline (1-800-232-5454). Management personnel who suspect or detect such activity shall not initiate investigations on their own nor alert the suspected individual(s) of an impending investigation.
3. Taxpayer or Other Citizen Reporting Requirements. A citizen who suspects or detects fraud, waste or abuse regarding UTFI resources should contact the University of Tennessee Audit and Consulting Services (865-974-6611) or the State of Tennessee hotline (1-800-232-5454).
4. Retaliation Prohibited Against UTFI Employees. Employees who report fraud, waste or abuse shall be free of intimidation or harassment when reporting matters of public concern, including offering testimony to, or testifying before, appropriate legislative panels. No department head or other management official, employee exercising supervisory authority, or other employee or contractor shall recommend or act to discharge, demote, suspend, reassign, transfer, discipline, threaten or otherwise discriminate against a UTFI employee regarding the employee’s evaluation, promotion, compensation, terms, conditions, location or privileges of employment, nor may any employee or contractor retaliate against another UTFI employee because the employee, or a person acting on behalf of the employee, reports or attempts to report, verbally or in writing:
   1. The willful efforts of such persons or contractor to violate a state or federal law, rule or regulation that had or would have had a material and adverse effect upon program operations or program integrity, or the willful efforts to conceal such a violation.
   2. Acts constituting fraud against UTFI, state, federal government, public, or any fellow employees.
   3. The willful misappropriation of gift resources.
   4. Acts posing an unreasonable and specific danger to the health or safety of the public or employees.
   5. Acts constituting gross mismanagement of a program, gross waste of gift funds, or gross abuse of authority.

In accordance with the Higher Education Accountability Act of 2004, any person who knowingly and willingly retaliates or takes adverse action as noted above against a person for reporting alleged fraud, waste or abuse, or for cooperating with the investigation of such allegations, is subject to disciplinary action, up to and including termination of employment, and criminal prosecution.

The department head, management official, or other employee exercising supervisory authority over the UTFI employee may, however, take any appropriate action or appropriate disciplinary action in relation to the reporting or attempted reporting of any information that is believed in good faith by such department head, management official, or other employee exercising supervisory authority to be fraudulent, dishonest or with willful disregard for the truth or falsity of the information.

5.24.5   Confidentiality #

Detailed information received pursuant to a report of fraud, waste or abuse regarding UTFI resources or any ongoing investigation thereof shall be considered work papers of the UTFI external auditor or university’s internal auditor and shall be confidential. Such information, however, may be disclosed to the public in accordance with a subpoena or court order.

5.24.6 Recovery of Assets #

UTFI will take appropriate action to recover any assets lost as a result of fraud, waste, or abuse. UTFI funds may not be used to pay for losses for which an employee is responsible under this policy. Actions to recover such losses include the following:

1. Voluntary Return or Repayment. Generally, action to recover losses should not be taken until an investigation has been completed. At any time, however, UTFI officials may accept voluntary offers to reimburse UTFI for losses due to alleged employee dishonesty. Repayments should be appropriately receipted and deposited to a cost center/WBS element. Officials accepting repayment should inform the employee that such offers will not cause an investigation to stop, relieve the employee of liability for future claims, nor prevent prosecution under criminal law.
2. Demand for Repayment. If an investigation concludes that an individual’s or entity’s actions have resulted in loss of UTFI assets, the chief operating officer, after consultation with legal counsel, should demand repayment from the person or entity. The demand may be verbally or by letter.
3. Withholding of Salary and Wages. If an employee is charged with gross misconduct, UTFI may recover losses due to the employee’s actions by withholding part or the entire amount owed from the employee’s paycheck. The amount to be withheld must be communicated to the employee in writing. The written communication must also explain the employee’s right to appeal pursuant to section 7.2.6 of 7.2 Disciplinary Action. Even when an appeal is filed, the paycheck will be held to the extent allowed by law pending the outcome. In addition, because employees who are terminated for gross misconduct lose unpaid sick and annual leave, they may not use this leave to pay debts to UTFI.
4. Legal Action. When full recovery of assets attributed to fraud, waste, or abuse by employees, other individuals, or entities is not realized from other means, the COO may initiate legal action on behalf of UTFI.

5.24.7 Prosecution Under Criminal Law #

Any person who steals, fraudulently obtains, or otherwise intentionally misuses UTFI assets, or aids and abets others to do so, or in any way engages in criminal activity with respect to UTFI property, contracts, or other resources, is subject to criminal prosecution. The UTFI external auditor or University Audit and Consulting Services will send the state Comptroller a final report on every investigation of losses due to employee dishonesty.

5.24.8 Settlement #

All proposed settlements of liability for fraud, waste, or abuse must be submitted through the CFO to UTFI legal counsel for advance approval. In some cases, employees suspected of fraud, waste, or abuse will request a settlement that relieves them of liability for losses identified in subsequent investigations. No written or verbal agreements may be made to relieve an employee of liability for such losses without the advance approval of the CFO and legal counsel.

5.24.9 Annual Statements #

Updated: June 1, 2021