Systems Are Great- If They Talk to Each Other

Computer systems are great. They allow people to be more productive and process transactions at a fast rate. All businesses use technology and rely on it to increase profit. Relying on technology has risk. If the systems don’t talk to each other- if the results of related systems aren’t compared or analyzed- dishonest employees can take advantage.
A university has two computer systems. One enrolls students in classes. This program enrolls students and handles those who drop or withdraw from courses. When a student withdraws before a deadline, the same system generates a tuition refund check to the student.
A second system handles financial aid. This program processes financial aid applications and processes payments from the government (or some other lender) to the university to cover tuition costs.
A university employee has access to the first computer system. She helps student enroll, drop and withdraw from classes. She also enrolled in classes at the school and received financial aid for her tuition costs. So far, no problem.
The employee withdraws from the course. She backdates the date of withdrawal before the deadline, so that a refund is issued to the government. After all, they gave her the financial aid to attend the class, right? Wrong. The backdated course withdrawal generates a refund check to the student, not the government. The university should not send a refund to the student until they verify that no loans are outstanding. The employee is able to manipulate the system to ignore the outstanding tuition loan. Somehow, the systems don’t talk to each other. The employee was caught and the federal government was reimbursed for the borrowed funds, totaling about $15,000.
The Lesson: As you increase your use of technology to increase productivity, consider how each of your systems need to share information. Don’t sacrifice control to gain more processing speed.
Your Homework: Do you understand the full impact of each program you use in your business? Specifically, how is cash processed through each system? Finally, who has access to those systems that process cash, credit cards and other payments.
(Source: “Ex-SLU employee admits fraud in scam over classes”, St. Louis Post Dispatch, 8/2/07)