Finance Safeguards: A Practical Fraud Risk Checklist for Schools

Fraud prevention might not be a daily concern in most schools, and that is entirely understandable. With budgets, staffing, compliance, and day-to-day admin all competing for attention, taking time to review your financial processes can feel like something to push to the bottom of the list.

But it should not be ignored. Fraud in schools rarely comes from elaborate schemes. More often, it starts from outdated processes, unclear responsibilities, or small gaps in oversight that snowball over time. Running a fraud risk check does not have to be complicated or time-consuming. It is about ensuring the systems you trust are still protecting your school.

This guide outlines practical steps you can take to assess risk, tighten your processes, and build a stronger foundation for your school's financial operations.

1. Does Your Policy Reflect Current Practice?

Most schools have financial and procurement policies, often created to comply with regulatory requirements or meet school registration standards. The real test is whether those policies are actually followed in day-to-day operations.

Ask these questions:

• Do your approval thresholds reflect your current staffing structure? Have roles changed without updating the delegated authority register?

• Can any single person initiate, approve, and process a payment? If so, you lack separation of duties, which is a key control risk.

• Are procurement cards and reimbursement claims being submitted with valid tax invoices and pre-approvals? Or are staff taking shortcuts and relying on manual corrections later?

In many schools, policy and practice gradually diverge as teams adapt to pressure or staff turnover. That is normal. What matters is taking the time to realign them. A short internal review each term can be enough to identify where policy updates or refresher training are needed.

What to do next:

Compare your policy documents with the actual workflows your team uses. Where they do not match, either bring practice into line or formally adjust the policy with leadership sign-off. Communicate any changes to the wider team with clarity and rationale.

2. Review Payments for Common Risk Indicators

Looking at your payment history is one of the fastest ways to spot potential risks. You do not need expensive systems or a consultant. A basic export from your finance platform will do.

Review the following:

• Are there duplicate payments to the same supplier in a short period? These may be caused by duplicate invoices or poor invoice tracking.

• Are payments frequently just under the limit that requires approval? This could signal deliberate threshold avoidance.

• Are any EFTs or cheque payments being made outside the main approval process? If so, why?

• Are reimbursements repeatedly going to the same person? Is this appropriate for their role?

• Are there any "urgent" payments that skipped the standard process?

These are not necessarily signs of fraud, but they are signs of vulnerability. Rushed processes, informal approvals, or off-system payments can open the door to both error and misuse.

What to do next:

Create a simple checklist or dashboard to monitor these flags on a regular basis. If patterns emerge, talk to the team involved and understand the context. Adjust workflows, thresholds, or approval steps if needed.

3. Clean Up Your Supplier Records

Supplier records are one of the most neglected parts of school financial systems. Over time, they accumulate duplicates, outdated details, and vendors added informally when staff were trying to get things done quickly.

Start your review by checking:

• Are there vendors in your system that have not been paid or contacted in the past 12 months?

• Are there duplicate records for the same vendor under slightly different names?

• Are vendor ABNs registered and verified? Do they match the business name provided?

• Do any vendors use free email domains like Gmail or Outlook, and have those addresses been verified?

• Have any vendor bank details been changed recently, and was a second person involved in confirming the change?

Keeping your supplier list clean not only reduces fraud risk but also improves payment accuracy and speeds up month-end reconciliations.

What to do next:

Remove inactive vendors or archive them in your system. Introduce a basic supplier onboarding process with checks for ABN validity, signed agreements, and dual confirmation for bank detail changes. Lock down who can add or edit supplier records.

4. Review System Access and Approval Authority

System access should not be set and forget. Over time, user permissions expand quietly, especially when people cover roles temporarily or when tech access is shared between admin staff. These gaps often go unnoticed until an audit or error forces a review.

Ask these questions:

• Who currently has access to your finance or AP system? What can they see and what can they change?

• Who can create, edit, or approve supplier details?

• Who can approve or release payments, and at what limits?

• Are there any shared logins being used by more than one staff member?

• Are invoice approvals happening via email or outside of the system?

Misaligned permissions or unstructured workflows reduce accountability. They also make it harder to detect fraud or respond to audit requests.

What to do next:

Review your user permissions once a term. Remove any unnecessary access. Use unique logins and role-based permissions wherever possible. If your system cannot support this, document your controls manually and escalate for future system upgrades.

5. Apply Automation Where It Is Practical

Not every process needs to be automated, but the right tools in the right place can help reduce friction, enforce policy, and protect your team from unintentional errors. Automation is especially useful when your current workflow relies heavily on paper or email approvals, spreadsheets, or memory.

Automated AP tools can help with:

• Centralising invoice capture so nothing gets missed

• Automatically checking for duplicates across invoices, vendors, or amounts

• Enforcing approval rules based on thresholds and responsibilities

• Providing an audit trail for every action taken

• Notifying users when bank details are changed, ABNs are expired or invalid, or a policy exception occurs

With good automation, your controls are built into the process, not bolted on at the end.

What to do next:

Identify where most of your AP time is spent or where the most frequent errors occur. Start by automating one or two areas that cause the most admin pain or audit issues. Keep it simple and scalable.

6. Share a Summary with Your Leadership Team or Board

Fraud prevention should not sit in the background. Sharing your review and actions with school leadership shows proactive governance and supports informed decision-making.

Include in your report:

• What areas were reviewed and why

• What gaps or risks were identified

• What immediate fixes were made

• What will be reviewed or improved next

• A brief comparison to best practices or tools in the market to support future investment discussions

Even a half-page summary in a board pack or principal report goes a long way. It signals that financial controls are being taken seriously and gives leadership a clear picture of what's working and where more support might be needed.

Final Thoughts

Fraud in schools often starts with small process gaps, not deliberate misconduct. When systems rely on memory, informal approvals, or staff doing multiple roles without oversight, the risk increases.

The good news is that it does not take long to tighten things up. A simple check of your policies, payments, suppliers, and system access can surface small problems before they become major ones.

If your school is looking to reduce admin load, improve financial oversight, or bring more structure into AP, Alii can help. We work with schools to make finance processes clearer, safer, and easier to manage.

No jargon. No pressure. Just practical support for teams that want their systems to work better.