MEMPHIS, Tenn. (WMC) – State officials released the final forensic audit of Memphis-Shelby County Schools (MSCS) on Wednesday morning.
The report includes a cybersecurity review, a separate investigation into the vacant Herbert STEM Center at Whitehaven High School, and a TennCare evaluation.
It provides more detail than the partial findings released in April. Those early findings flagged more than $1.1 million in waste or abuse after auditors had reviewed about 25% of district contracts.
The forensic audit reviewed district operations for fiscal years 2022 through 2024. Auditors identified about $54.2 million in transactions they said showed potential signs of fraud, waste, or abuse.
Auditors also identified about $65.1 million in transactions with evidence suggesting noncompliance with district…
PAYROLL & HR CONTROLS (PREVENTING “GHOST” SCHEMES)
Payroll fraud is often the hardest to detect because it “looks” like a normal business expense.
- Segregation of Duties (SoD): The person who adds new employees to the system must not be the same person who approves the monthly pay run.
- Mandatory Vacation Policy: Require all financial and HR staff to take 5–10 consecutive days of leave annually. Fraud often surfaces when the perpetrator isn’t there to “hide” the trail.
- Ghost Employee Audit: Perform a quarterly “Headcount Reconciliation” where managers must physically verify every name on their payroll list exists.
- Self-Pay Blocking: Ensure the payroll software has a hard-coded block preventing administrators from editing their own salary or bank details.