Photo: TaxRebate.org.uk

New Approaches for Fighting Fraud

Agencies must develop guidelines for assessing fraud risks and plans to address them. Here’s how they can do it.

The Fraud Reduction and Data Analytics Act, signed into law in June 2016, requires the Office of Management and Budget to set guidelines for agency identification and assessment of fraud risks and the design and implementation of controls to prevent them. These guidelines must incorporate the leading practices in the Government Accountability Office’s Framework for Managing Fraud Risks in Federal Programs. The act also requires OMB to lead interagency coordination among agencies to share and promote best practices in the law’s implementation.

Agencies are grappling with the practicalities of implementation of the new law. Given the variability in fraud risks, fraud risk management must take place at different levels within an organization. And because fraud risk assessments are relatively new, taking an incremental approach makes sense.

One way to approach the new mandate is for cabinet-level leadership to direct components to assess overall fraud risks and develop a prioritized list of programs based on the inherent risks they identify. For example, within the Veterans Affairs Department, the Veteran’s Health Administration’s fraud risks might rank higher in potential consequence than those identified by the Veterans Benefits Administration. If that turned out to be the case, the VA administrator could direct the VHA to conduct a comprehensive fraud risk assessment, develop a risk profile and come with a response plan. After the agency develops the process, tools and templates for carrying out the risk assessment and developing a response, lessons learned from implementation can benefit the approach taken in the next-highest risk program.

Another approach organizations might take is to look at high-risk processes within an agency or component. For example, an agency like the National Science Foundation may assess processes in place to oversee grantees across all of its programs and identify risks and tailor response strategies to them. As the fraud risk management process is developed, the activities can be incrementally applied to other areas of the agency. It’s important to note that the Fraud Act and GAO’s Fraud Risk Management Framework apply not only to financial fraud, but fraud that impacts operations and the organization’s reputation. While beneficiary fraud may pose the largest risk based on the level of funding, internal fraud—such as purchase card, travel card or even telework fraud—can also pose significant risk.

Congress established robust annual reporting requirements in the Fraud Act. Many agencies are unclear what to include in such reports. Below are some considerations for how to approach these requirements at different levels of government.

Ideally, at the cabinet level, the department would develop a high-level fraud risk profile that assesses risks across components, prioritizes them and designates entities to address them. This would provide a useful snapshot of the department’s fraud risk.

At the component level, agencies could develop more detailed fraud risk profiles. These profiles would identify programs with the highest risks, describe them and detail planned actions to mitigate them. This can serve as a blueprint for incoming component agency heads to understand the extent and nature of fraud risks across the programs, how mature the responses are, and where to focus fraud prevention efforts.

In some cases, it may be necessary to develop fraud risk profiles for specific programs, especially the very largest ones. These include major benefit programs, such as those administered by VBA or the Disability Insurance program managed by the Social Security Administration. It could even apply to major grant-making and large contract programs. These face significant fraud risks, so risk assessments and profiles at the program level are appropriate.

The Fraud Act requires the creation of a working group to share financial and administrative controls, best practices and techniques for detecting, preventing and responding to fraud. It gives the group specific responsibility for developing and sharing data analytics techniques. The working group provides an excellent opportunity to share and leverage expertise across the government and beyond. Similar working groups for other purposes, such as implementation of the 2014 Digital Accountability and Transparency Act, have been key tools in successful interagency coordination. One model to consider emulating is the current sharing of data analytics techniques among inspectors general.

The Fraud Act provides an excellent opportunity for the federal government to take a proactive approach to managing and mitigating fraud risk. With the right focus and implementation strategy, agencies can reduce fraud in their programs and bolster faith in the government’s ability to protect tax dollars. Likewise, the Fraud Act provides an opportunity for OMB to establish anti-fraud working groups that will help agencies leverage what is already working. With more than $140 billion in improper payments made annually, the effort would be well worth it.

Linda S. Miller, a former senior official at the Government Accountability Office, is a director with Grant Thornton Public Sector’s Fraud Risk Assessment practice.

Photo: TaxRebate.org.uk

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.