Profiles of School District Fraud: Student Activity Accounts and Purchasing Cards Schemes

• In Event: Accounting

Abstract

Using a multi-state sample of 53 school district investigations from 2011 to 2018, we examine the reality of activity fund account malfeasance. First, we document that activity accounts comprise the most frequent category of school district investigations, exceeding improper purchasing card usage in the number of cases. We further examine if there are differences in frequency between the activity account investigations connected with district accounts as compared to ones where the school district has fiduciary responsibilities, known commonly as student activity funds. Our results fail to support differences in the frequency of investigations for malfeasance. Our study has implications for Governmental Accounting Standards Board’s (GASB) Statement 84 Fiduciary Activities, effective for 2019, as student activity funds were a consideration of the standard setters. Beyond financial reporting, this exploratory study highlights the cash handling risks existing in school districts that will be interest to taxpayers who are required to approve any new bonds issued by these same school districts. This study fills a unique gap in the literature with an exploratory examination of fraud within public school districts.

Authors

• Christine Cheng, The University of Mississippi

• Renee Flasher, Penn State Harrisburg

• Kristy Schenck, Bucknell University