Posted by & filed under Fraud.

Description:  It certainly was an eye opener! As reported in the Ryerson University student newspaper called the Eyeopener, the student union appears to have $250,000 in credit card charges that need some explaining. That’s a lot of money for student leaders to be charging. A number of students began asking questions, with one commenting that a failure by the students’ union to issue quarterly financial statements caused concern. Meanwhile, the president of the student union said the accounts will be reconciled by a February 1 deadline.

Date:  January 25 , 2019

Source:  cbc.ca via msn.com

Link: https://www.msn.com/en-ca/news/canada/ryerson-students-union-under-pressure-to-explain-baffling-dollar250k-credit-card-bill/ar-BBSKkmL?ocid=spartanntp

Discussion points: 

1) Do you attend Ryerson, or know anyone who attends there? What is the latest discussion around campus on this matter?

2) What type of governance weaknesses might be exposed by this story?

3) In Wiley’s Auditing: A Practical Approach you can read about the fraud triangle. Do you see how any of the three sides of the triangle may have been at work in this case?

2 Responses to “An Eyeopener!”

  1. Liam Carmichael

    1) I don’t know anyone who attends Ryerson. I did come across the article a few days ago though and was baffled when reading it. It makes me wonder if we have better controls in place here at StFX to limit opportunities such as this one. Perhaps when seeing articles like this, StFX should re-look at our current controls to ensure that something like this would not happen within our Student’s Union.
    2) The accountability of the employees of the Student’s Union and its key managers may have been lacking. Managers of the student and its colleagues let this issue past them. They may have needed a refresher to be continuously monitoring the Union’s activities and working to put proper controls in place.
    The Union was lacking leadership in this event, as the people in charge were working against their own members, the students, and rather only in their self-interest.
    3) I would say that Opportunity was at work in this case and helped to contribute to the fraud that occurred. The article mentions that the GM of the Union was fired, which lead to the students having complete access to the credit card. This leads to the students being able to use the credit card(s) at their own will without approval, which eventually lead to the numerous expenditures taking place.

    Reply
  2. jared Gray

    There are multiple corporate governance weaknesses that are being exposed by this article. First, there would have to be a lack of leadership within the entire students’ union and also whatever department the union reports to. A strong leadership presence would ensure there were multiple checks on student union expenditures and people in authority positions would be held accountable. Next, integrity of the unions budget should come under question. The rules and regulations around the unions ‘discretionary funds’ must be not existent for seemingly miscellaneous expenses to be deemed appropriate. Lastly, what is the selection process for prominent student positions?

    Of the three sides to the fraud triangle, opportunity would be the most relevant in this case. As a result of the weak or non-existent internal controls anyone with purchasing authority would have the opportunity to misuse funds. The article makes it seem as if there are no checks concerning the usage of resources and that purchasing decisions were largely made by the union president. These conditions provide a great opportunity to misuse student union resources.

    Reply

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