FIRST LINE OF DEFENSE:
ETHICS AND THE CODE OF
CONDUCT FOR CFFOS AND
THEIR STAFF
Gail M. Olson, General Counsel
December, 2013
The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.
Culture and tone matter
• Tone, expectations are set at the top
• Chief financial and facilities officers,
business managers, and other finance
staff play a critical role in establishing
norms and expectations for all staff
• Critical to have appropriate policies,
guidance, and training for employees
• Recent auditor comments validate that
you are setting high standards
Slide 2
Purpose of statutes, policies
• Protect the public’s interest in sound use
of public resources
• Protect the state/system fisc from
inappropriate/unauthorized use
• Ensure resources are available for
intended purposes
• Protect employees by clarifying
expectations, allowing them to take
appropriate actions
Slide 3
Sale or purchase of state property
Minn. Stat. § 15.054
• Employees cannot sell, possess, control
state property for sale to any other
employee, unless property is no longer
needed AND:
– Reasonable public notice
– Sale at auction or by sealed bid
– Employee making purchase is not involved in
auction/opening bids
• Does not prohibit sales in normal course
of business (e.g., state park sticker)
Slide 4
Acceptance of advantage
Minn. Stat. § 15.43
• Employee who is either:
– in direct contact with suppliers or potential
suppliers OR
– able to influence directly or indirectly a
purchase or contract
• May not:
• Have any financial or other interest, direct or
indirect, in contract or purchase
• Accept directly or indirectly from contractor or
purchaser a rebate, gift, money or other item of
value, or promise for future reward
Slide 5
Not to exceed appropriation
Minn. Stat. § 16A.138
• Unlawful to incur indebtedness in excess
of appropriation made for a specified
purpose
• Cannot incur indebtedness prior to
appropriation being made for the expense
• Violations subject to misdemeanor
charges, termination from employment
Slide 6
Misappropriation
Minn. Stat. § 16A.139
• Prohibited from using money appropriated
by law or paid fees for purposes other
than what is authorized
• Violations subject to gross misdemeanor
charges, termination from employment
Slide 7
Allotment and encumbrance
Minn. Stat. § 16A.15
• Cannot make payment without prior
obligation
• Must have sufficient funds encumbered
before creating obligation
• Payments made in violation of the chapter
are illegal
• Employee authorizing or making the
payment is liable to state for amount paid
Slide 8
• Violation is basis for termination from
employment
MMB Code of Conduct—Statewide
Operating Policy
• MMB Internal Control & Accountability # 0103-01,
Issued 1/3/12
• Available at:
http://www.beta.mmb.state.mn.us/doc/statewidefinancial/ch1/0103-01.pdf
Slide 9
MnSCU Employee Code of
Conduct
• System procedure1C.0.1
– http://www.mnscu.edu/board/procedure/1c0p1.html
• Compilation of various existing statutes
and policies that apply to employees
• Also contains introduction describing
expectations for employees
• Supersedes any conflicting campus codes
of conduct.
Slide 10
Goals of the MnSCU Employee
Code of Conduct
• Reinforce the importance of ethical
behavior.
• Create a unified reference for major employee
conduct policies.
• Provide better tools for training, enforcing
ethics issues.
• Make policies more accessible for supervisors
and employees.
• Establish laudatory goals as well as
proscribed behavior.
Slide 11
Part 1. Purpose and scope.
• Applies to all employees
– administrators, faculty, staff, students
employees, FT or PT, temporary or
permanent.
• Employees also subject to standards for
their particular discipline.
Slide 12
Part 2. General.
• System to provide high quality education
with sound stewardship.
• Employees to act with integrity, fairness,
respect, inclusivity.
• Employees to be honest, trustworthy,
efficient and effective, accountable and
compliant with law, policy.
Slide 13
Part 3. Employee ethics.
– Compensation, benefits, gifts from
other sources
– Personal advantage
– Use of state property
– Political influence
– Purchasing state property
Slide 14
3 Basic Principles
1. State/MnSCU resources are not to be
used for private purposes.
2. Gifts/favors given for duties performed by
employee are prohibited.
3. Conflicts of interest must be avoided
when acting on behalf of the state.
Slide 15
Public Resources, Not Private
General rule is that public resources may
not be used for personal purposes, interests.
“An employee shall not use or allow the
use of state time, supplies or state-owned
or leased property and equipment for the
employee’s private interests or any other
use not in the interest of the state, except
as provided by law.”
Slide 16
Conflict of interest
• Defined as use or attempted use of the
employee’s position
– To secure benefits, privileges, exemptions or
advantages
– For the employee, family or an organization
the employee is associated with
– Which are different than those available to the
general public.
Slide 17
Part 4. Other policies.
•
•
•
•
•
•
•
•
Slide 18
Nondiscrimination—1B.1
Fraud and other dishonest acts
Intellectual property
Nepotism
Weapons and safety
Acceptable use of computers/technology
Information security and privacy
Alcohol and drug use
Part 5. Reporting fraud.
• Board Policy 1C.2 requires reporting
suspected fraud and abuse.
• Refers employees to supervisor, manager,
Office of Internal Auditing, Office of the
Legislative Auditor.
Slide 19
Reporting Fraud: Who?
• An employee with a reasonable basis for
believing fraudulent or other dishonest
acts have occurred has a responsibility to
report the suspected act in a timely
manner. (Board Policy 1C2, Part 4)
Slide 20
Reporting Fraud: Who?
Managers & Supervisors
Managers and supervisors are responsible for
– educating employees about proper conduct,
– creating an environment that deters dishonesty
– maintaining internal controls that provide
reasonable assurance of achieving management
objectives, and detecting dishonest acts
– being aware of the risks and exposures inherent in
area of responsibility and symptoms of possible
fraudulent or dishonest acts
Board Policy 1C2, Part 1
Slide 21
Reporting Fraud:
Possible Fraud Indicators
• Accounting Anomalies
– Missing Receipts
– False or altered documentation
– Duplicate payments
– Highly unusual items
– Unreconciled shortages
• Complaints and Tips
– Do not discount frequent complainers or
anonymous tips
Slide 22
Reporting Fraud: What?
Supervisory Review
• Employee Expense Reports
• University-provided Credit Card Bills
• Cell Phone Usage
• Special Expenses
• TANSTAAFL
Slide 23
Reporting Fraud: How?
• To supervisor or manager
– Unless linked to incident, then to a higher
level employee
• Institutional Fraud Contact
• HR Director
• MnSCU Office of internal Auditing
• Office of the Legislative Auditor
Slide 24
Reporting Fraud: How to report to
law enforcement?
• For emergencies, report incident
immediately to law enforcement
– Robberies
– Burglaries
– Break-in thefts
• Other matters, report to Internal Auditing
– Consultation with General Counsel
– Referral to USDOE (e.g., financial aid)
when warranted
Slide 25
Reporting Fraud: When?
• University reporting channel
– Incident
Inquiry
– Escalate if respondent is uncooperative,
belligerent, or unduly argumentative
• Report to Internal Auditing
– Inquiry
Slide 26
Investigation
Test your knowledge!
• Frequently asked ethics questions are
online, linked to Code of Conduct:
http://www.hr.mnscu.edu/guide_interpretations/P
ER/PER0004.pdf.
• FAQs include topics often raised by
employees, supervisors.
• Contact HR or OGC if you have questions
about the FAQs.
Slide 27
Supervisor Checklist
• Know your policies and procedures.
• Follow up on irregular or suspicious
activity.
• Don’t ignore anonymous warnings or
complaints from “problem employees.”
• Even if you trust an employee, clearing up
any questions is better for the employee
and you.
Slide 28
THANK YOU!
Gail M. Olson, General Counsel
651.201.1750
gail.olson@so.mnscu.edu
The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.