Country / Language

Managing Construction Risk in Higher Education with Formidable Integrity Monitoring


Colleges and universities are continually challenged to maintain a sustainable financial model while providing state of the art facilities that the students of today are demanding. A key financial mission of all educational institutions is to increase enrollment, maintain a solid academic reputation and generate strong revenue. A prestigious reputation is built upon years of proper management and astute financial planning. However, the degree of separation between an institution’s good name and one that is tainted can be just one instance of fraud or misconduct.

After postponing capital expansion during the recent recession, colleges and universities are once again investing in facilities development programs. Moreover, as summer continues, construction activity traditionally increases. At the same time, the size and complexity of construction endeavors can increase the risk of fraud, waste and abuse in an industry that is already inherently vulnerable and under a tremendous degree of public scrutiny.

Cases of Construction Misconduct in Higher Education Institutions

In 2012, a former New York State college construction project manager pled guilty to first degree larceny and was sentenced for embezzling approximately $2.5 million over a period of years.1 The scheme included setting up a fictitious construction company and charging the college for work not performed. Other examples include a bid-rigging scheme carried out by a former construction manager of another New York State college with the aid of a contractor, resulting in siphoning more than $2 million from the college.2

Best Practice: Implement a Construction Integrity Monitoring Program

The stakes are high. Fraud, waste and abuse of contracts can add as much as 25% to the total cost of a construction project. Perhaps even more severe are the consequences of a drop in enrollment, safety issues, increased scrutiny by donors, bondholders or other stakeholders, negative publicity and a tarnished image.

An integrity monitor is an independent third party retained by an organization to minimize opportunities for fraud, waste, and abuse, as well as to assure compliance with legal and regulatory requirements. A typical construction project brings together many stakeholders and large sums of money for a relatively short span of time, which creates an environment that is conducive to corruption. Further exacerbating the issue for colleges and universities, in many cases, their facilities, accounting and finance departments lack the internal controls and infrastructure needed to effectively monitor construction activity. An integrity monitor serves to assess the project, program or organization in real-time to determine the potential for corruption, fraud, waste, abuse, and violations of laws and regulations. Institutions must take action to implement a formidable construction integrity monitoring program to ensure that costs are proactively controlled and that any instance of fraud is effectively preempted.

From Theory to Practice

When higher education construction management teams execute an integrity monitoring program correctly, the program can pay for itself.

When higher education construction management teams execute an integrity monitoring program correctly, the program can pay for itself. An integrity monitor first considers the current internal control environment of the organization being monitored. Based on the initial assessment, weaknesses and vulnerabilities are identified, and recommendations on how to address any shortcomings are given. Recommended solutions are then implemented and monitored. An effective integrity monitoring program should adopt a multidisciplinary and integrated approach, utilizing the specialties of various professionals including auditors, investigators, legal professionals, and loss prevention specialists.

Tailoring to the scope and objectives of the particular project, an integrity monitoring program typically consists of five major phases:

1. Gain an Understanding of the Scope and Primary Objectives

Obtain a clear understanding of the operational environment, institutional structure and culture, key objectives, communication channels, points of contact, the main and subcontractors, and how the current internal control structure is designed to function in order to mitigate risk. This is accomplished through meetings with key management and other necessary stakeholders and reviewing appropriate documentation.

2. Conduct an Integrity Risk Assessment

Conduct risk assessments and workshops to develop a well-defined and integrated risk management process that provides the project team with the tools and procedures needed to manage risk. Identify and categorize potential risks, assess the likelihood of occurrence and magnitude of the impact, and prioritize and manage risks.
3. Develop a Project Work Plan for the Monitoring Activity

Develop a Project Work Plan (PWP) based on the finalized audit universe and corresponding integrity risk audit and mitigation plan. PWP will identify each integrity risk area and an assigned risk rating, mapping of the risk to key controls, and recommended audit cycle.

4. Execute the Project Work Plan

Monitor selected areas of concern throughout the various phases of the project. Based on the initial assessment of the business under review and discussions with stakeholders, the Integrity Monitor will execute the planned monitoring activity.

5. Report on the Results of the Monitoring Activity

Deliver status reports and key documents, such as the risk assessment and PWP, to the board members. Communicate any issues that arise, as well as the program’s progress, to the board members through each phase of the integrity monitoring program. If requested, a report concerning such issues can be prepared. Prepare and submit a monitoring, audit, or investigative report, to the board members, describing the scope of the activity, background information, procedures, findings, conclusions, and recommendations.

Utilize Proven Tools to Uncover Fraud

A crucial component to any thorough integrity monitoring program is the use of data analytics tools. Forensic accountants and fraud investigators must leverage forensic and analytics tools to identify anomalies that can be tied to fraudulent dealings, unscrupulous contractors, and the misappropriation of federal funds. The ability to synthesize large volumes of information in concise dashboards, cloud-based systems and other user-friendly platforms is absolutely vital.

What Does CohnReznick Think?
To combat fraud, waste, and abuse, colleges and universities, as well as other not-for-profit organizations are reducing their risk of exposure by utilizing the services of integrity monitors. These independent advisors serve as stewards of program and project funds, ensuring funds are used as originally intended and ultimately protecting the integrity of the institution. As many higher education institutions enter a period of capital investment in construction facilities projects, it is simply best practice to adopt an integrity monitoring program early on that will safeguard against any threat of misconduct and risk to the institution’s name.

For more information on how your educational institution can benefit from an integrity monitoring program and to discuss a strategy for implementation, please contact:

Jack Callahan, Partner and Construction Industry Practice Leader; 732-380-8685

James Perrino, Partner, Not-for-Profit & Education Industry Practice; 646-625-5769.

Gerard Frech, Director – Government Services; 732-635-3131

Stay tuned for details on our upcoming webinar exclusively for leaders of educational institutions on how to strategically build an effective integrity monitoring program.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Search Our People

Search Our People

Look ahead. Gain insight. Imagine more. Is your business ready to break through?

View our new TV commercial..

Industry Outlooks

Industry Outlooks

Gain insight into what is ahead for the Commercial Real Estate, Technology and Middle Market Private Equity industries.


Learn about our upcoming events.


Working With Us

Working With Us

What makes CohnReznick different from others in our profession? And what should our clients come to expect when working with us? The answer is The CohnReznick Advantage. Contact us to learn how we can out the CohnReznick Advantage to work for your business.


The value of an organization is determined by the skills and qualities of its leaders. With more than 280 partners serving clients nationwide, CohnReznick is renowned for the diverse experiences, knowledge and backgrounds of its leadership.

Learn More


We align our services in three segments: Accounting and Assurance, Tax, and Advisory. This approach allows us to provide holistic solutions to complex business problems and to seize upon opportunities requiring an integrated approach.

Learn More


Accounting and tax issues different significantly based on an organization's industry. We provide clients with expertise in nearly two dozen industries – we know the opportunities, the obstacles, the competitive landscape.

Learn more


CohnReznick professionals are thought leaders in their industries. Clients benefit from relevant and timely economic, legislative and industry insights that can keep them a step ahead of competition.

Learn More

Global Reach

Our involvement in the Nexia International network of firms enables us assist our clients wherever they do business-providing local expertise and connections wherever they needed. Nexia is comprised of 20,000 professionals operating in over 100 countries.

Learn More