Fraud Awareness Training: 

Detection and Prevention

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Agenda

Office of Inspector General Overview

What is Fraud?

Who Commits Fraud?

Why?

Common Types of Fraud

Fraud Detection

Red Flags

Example Cases

Fraud Prevention

What can you do?

How to report suspected fraud?

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Office of Inspector General Overview

Authority of the Office of Inspector General:

The IG Act of 1978- Congress established the Office of Inspector General (IG) in each of the Government’s major departments. The GPO Inspector General Act of 1988. IG’s conduct audits, inspections, and investigations in order to prevent and detect fraud, waste, and abuse and increase effectiveness and efficiency of agency programs. 

Other Authority:

44 USC § 3903 (GPO-OIG’s Statutory Law Enforcement Authority)

Indicators of Procurement Fraud, GPO Publication 825.25, August 2004.

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Office of Inspector General Overview

Mission:

Conduct, supervise, and coordinate, audits, inspections, investigations, and other reviews

Prevent and detect fraud, waste, abuse, and mismanagement

Promote effectiveness and efficiency of agency programs and operations

The GPO – OIG accomplishes this in several ways:

Office of Investigations – criminal, civil, administrative (fraud)

Office of Audits – effectiveness and efficiency (financial & contract audits)

Office of Inspections – effectiveness and efficiency (abuse, mismanagement, & compliance)

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Fraud Overview

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What is Fraud?

Fraud has these elements:

Misrepresentation

of a material fact

with the intent to deceive

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 Who Commits Fraud?

People do!

Employees or management

Contractor personnel or government employees

Military or civilian

Companies can also be held responsible for actions of their employees

(Source: United States Air Force, “Fraud Awareness Training for COR-QAE Training Module” October 2008)

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 Why Do People Commit Fraud: Fraud Diamond Theory

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Fraud Detection

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Fraud Detection: Common Types of Fraud

False claims / false statements

Mischarging: overcharging, defective pricing

Product substitution / Counterfeit parts

Kickbacks, bribery, gratuities, conflict of interest

Theft of government property

Embezzlement 

Computer crimes

Collusive bidding/bid rigging/price fixing/antitrust

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Fraud Detection: Types of Investigations

Criminal – Potential violations of Federal law punishable by imprisonment, fines, restitution or probation.

Civil – Civil matters may be addressed during a criminal investigation or as the sole focus of an investigative proceeding and are generally punishable by fines. Double and treble damages may apply in False Claims cases.

Administrative – The act committed or the alleged infraction involves violations of Federal rules or regulations. Can apply to individual and/or organizations and leads to corrective actions, systematic changes, employee removal and/or suspension, monetary recoveries. 

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Fraud Detection: Red Flags

Frequent sole source contracts / non-competitive awards

Unusually high indirect charges

Double / inflated charges – have to frequently be contested

Frequently disallowed costs

Lack of supporting documentation

Supporting documents for invoices look “created”

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Fraud Detection: Red Flags (cont.)

Contractor has poor management officials

Restriction of records / original records not available

Charging maximum allowable price on invoices

Poor internal controls

Project milestones / deliverables are constantly delayed

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Fraud Prevention

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Fraud Prevention: What Can You Do To Combat Fraud?

Watch for “red flags” when performing duties

Be a skeptic (low estimates, quick turnaround, sole source, etc.)

Be accessible to hear complaints from project managers, technical reps, contractors, and subcontractors

Provide OIG contact information to contractors and subcontractors

When in doubt, ask the OIG

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Fraud Prevention: What Can You Do To Combat Fraud?

Ensure all purchases are legal, proper, reasonable and satisfy a bona fide need

Maintain all purchase card records and documentation

Approving Officials, perform their duties diligently and judiciously

Maintain separation of purchase card holder, hand receipt holder, and approving official

Have a copy of the contract and all modifications readily available

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Fraud Prevention: What Can You Do To Combat Fraud? For Contracting Personnel

Become familiar and remain current on terms, conditions and requirements of the contract

Verify the reasonableness of the contractor’s invoiced costs under a cost reimbursement type contract

Use performance language in the statement of work expressing only the governments actual minimal needs

Ensure that any required reports from you or the contractor are complete, accurate, and timely

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Fraud Prevention: What Can You Do To Combat Fraud? For Contracting Personnel (cont’d)

Monitor the work performance by the contractor in accordance with the surveillance plan

Inform the contractor immediately regarding unsatisfactory performance; differences of opinion should be referred to the Contracting Officer (CO) for resolution

Correct unsatisfactory work 

COR’s report serious or major problems to the CO immediately, don’t wait until your next scheduled report

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Ways to Report Fraud to the OIG?

GPO employees should report to the OIG – matters related to fraud, waste, and abuse in GPO programs and services, to include violations of law, rules, or agency regulations, mismanagement, and gross waste of funds.

This may include issues related to contract fraud and other financial crimes.

To reach the OIG Hotline:

1-800-743-7574 

gpoighotline@gpo.gov

All reports to the OIG hotline will be treated as confidential.

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Questions?

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