Auburn University Office of Audit, Compliance & Privacy

Case in Point: Lessons for the Proactive Manager

Volume 18 Issue 7 | July 2026

 

“Oh, what a tangled web we weave, when first we practice to deceive.”
Sir Walter Scott

Last month we focused on the topic of fraud and reviewed what we saw last year in Case in Point, recent cautions from the FBI, and the latest research on occupational fraud from the Association of Certified Fraud Examiners. We noted that in 2025, the top category of story in our Fraud and Ethics section was, for the first time, financial aid fraud. Ironically, this month the U.S. Department of Education held its first-ever higher education fraud summit, which focused particularly on one type of financial aid fraud. Several employees from AU attended this event, one of whom was our Assistant Vice President for Internal Audit & Chief Audit Executive, Traci McGill. I asked Traci to share her thoughts from this event.  

One growing threat that higher education institutions across the country are facing is known as “ghost student” fraud. In these schemes, bad actors use stolen or synthetic identities to apply for admission, enroll in courses, and obtain financial aid funds with no intention of attending school. These schemes are resulting in millions of dollars in losses and significant administrative burdens for colleges and universities.

In response to rising fraud levels, the U.S. Department of Education held its first Higher Education Fraud Summit this month. This summit discussed innovative approaches to combatting fraud and abuse in the sector and highlighted the Department’s Real-Time Fraud Detection capabilities within the FAFSA process that were released in April 2026. The initiative is designed to identify potentially fraudulent aid applications at the point of application by requiring enhanced identity verification requirements for certain applicants. These efforts represent a significant step by the Department of Education toward reducing fraudulent financial aid applications and strengthening confidence that federal aid is reaching legitimate students.

While federal controls are evolving, institutions should also evaluate their own safeguards. Key considerations include strengthening student identity verification processes, enhancing collaboration among admissions, financial aid, registrar, and IT functions, monitoring enrollment and attendance patterns for unusual activity, and leveraging analytics to detect suspicious application trends. A proactive, cross-functional approach can help institutions identify fraudulent enrollments earlier and protect both financial resources and access for legitimate students.

Here are some links if you’d like to dig into this topic more:
Ghost students
FinCEN Alert
New FAFSA real-time detection 
Fraud Summit held in July
New bill article
New bill text

Thank you, Traci, for this information and these links for those wishing to learn more.  Speaking of learning more, we again invite you to review the higher education events of the prior month with a view toward proactively managing risk.

M. Kevin Robinson, CIA, CFE
Vice President
Institutional Compliance & Security
Office of Audit, Compliance & Privacy
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If you have any suggestions, questions or feedback, please e-mail Kevin Robinson at robinmk@auburn.edu or Kristin Roberts at kar0032@auburn.edu. We hope you find this information useful and would appreciate hearing your thoughts. Feel free to forward this email to your direct reports, colleagues, employees or others who might find it of value. Back issues of this newsletter and subscription information are available on our website.
Last updated: 08/03/2026